/raid1/www/Hosts/bankrupt/TCRAP_Public/210113.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
A S I A P A C I F I C
Wednesday, January 13, 2021, Vol. 24, No. 4
Headlines
A U S T R A L I A
HALIFAX INVESTMENT: ASIC Cancels AFS License
OLD PORT: Second Creditors' Meeting Set for Jan. 20
SPEEDCAST INT'L: Black Diamond May Submit Last Minute Offer
C H I N A
YONGCHENG COAL: Financial Institutions Told to Rectify Behavior
[*] CHINA: Record US$30BB Bond Defaults Seen Rising This Year
I N D I A
AHAN ADD-CHEM: CARE Reaffirms B+ Rating on INR15.13cr LT Loan
AMARAVATHI TEXTILES: ICRA Lowers Rating on INR113.99cr Loan to D
B V PRABHUJEE: CRISIL Reaffirms B Rating on INR4.55cr LT Loan
DC WOVENSACK: ICRA Reaffirms B+ Rating on INR9.85cr Loans
DEVDASHRATH INFRATECH: CRISIL Withdraws B+ on INR4.10cr Loan
DISH TV: CARE Puts B+ Rating on Watch With Negative Implications
DYNAMIC FINE: CARE Lowers Rating on INR22cr LT Loan to B+
EASTERN INDIA: ICRA Assigns B+ Issuer Rating
ENVIIRO BUILDMATE: ICRA Withdraws B- Rating on INR26cr Loan
ETHELBARI TEA: ICRA Reaffirms B+ Rating on INR5.50cr Loan
GOKAK SUGARS: ICRA Withdraws B Rating on INR0.53cr Term Loan
GURUKRUPA METALS: ICRA Keeps B- on INR10cr Debt in Not Cooperating
J S SPINTEX: CARE Lowers Rating on INR16.74cr LT Loan to B
JAI BHARAT: ICRA Keeps B+ Debt Ratings in Not Cooperating
JAIN IRRIGATION: CARE Migrates D Debt Ratings to Not Cooperating
JAMMU MOTORS: CARE Lowers Rating on INR8.30cr LT Loan to B
KARDA CONSTRUCTIONS: ICRA Cuts Rating on INR31cr LT Loan to D
KHUDIRAM COLD: CRISIL Keeps B Debt Ratings in Not Cooperating
KIKANI INT'L: CARE Lowers Rating on INR3cr LT Loan to B
LEXUS MOTORS: ICRA Reaffirms B Rating on INR37cr Cash Loan
MAPUSA URBAN: Depositors See Serious lapses in liquidation process
MVK GLOBAL ENTERPRISES: Insolvency Resolution Process Case Summary
OM POWER: CRISIL Keeps B on INR1cr Credit in Not Cooperating
PARAMOUNT COSMETICS: CARE Assigns B Rating to INR17.12cr Loan
PRECON TECHNOLOGY: ICRA Lowers Rating on INR8cr Loan to D
PRIDE HOTELS: ICRA Lowers Rating on INR134.53cr Term Loan to D
R.S. FOODS: CARE Lowers Rating on INR8cr LT Loan to B-
REAL VIDEO: Insolvency Resolution Process Case Summary
SIYARAM METAL: ICRA Keeps B- Rating on INR35cr Cash Loan
SKS POWER: ICRA Lowers Rating on INR1,600cr Term Loan to D
WIND WORLD: CARE Reaffirms B Rating on INR185.73cr LT Loan
[*] INDIA: Liquidation Far Exceeds Companies Rescued Under IBC
I N D O N E S I A
REJEKI ISMAN: Fitch Assigns BB- Rating on Proposed USD Unsec. Notes
REJEKI ISMAN: Moody's Gives B1 Rating on Proposed Sr. Unsec. Notes
M A L A Y S I A
HATTEN LAND: Court OKs Unit's Scheme of Arrangement with Creditors
S O U T H K O R E A
SSANGYONG MOTOR: KDB to Inject Funds if Mahindra Hold Its Stake
- - - - -
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A U S T R A L I A
=================
HALIFAX INVESTMENT: ASIC Cancels AFS License
--------------------------------------------
The Australia Securities and Investments Commission (ASIC) has
cancelled the Australian financial services (AFS) licence held by
Halifax Investment Services Pty Limited.
The cancellation took effect from Jan. 8, 2021.
The terms of the AFS licence cancellation allow the Halifax AFS
licence to continue on a limited basis until Jan. 7, 2022, but only
for the purposes of:
* ensuring that clients of Halifax continue to have access to
an external dispute resolution scheme;
* ensuring that Halifax continues to have arrangements for
compensating retail clients, including the holding of
professional indemnity insurance cover; and
* providing financial services to retail or wholesale
clients of Halifax limited to the termination of
existing arrangements with clients.
These conditions have been put in place so that the cancellation
does not adversely affect past or current clients.
Halifax was a financial services licensee headquartered in Sydney,
with a partially owned subsidiary in Auckland, New Zealand.
On Jan. 8, 2019 ASIC suspended the Halifax AFS licence until Jan.
10, 2020.
This followed the appointment of Morgan Kelly, Stewart McCallum and
Phil Quinlan of Ferrier Hodgson as joint voluntary administrators
of Halifax on Nov. 23, 2018.
On March 20, 2019 at the second creditors meeting it was resolved
to place Halifax into liquidation and the administrators were
appointed as liquidators.
On Dec. 18, 2019, ASIC extended the suspension of the Halifax AFS
licence until January 8, 2021.
The joint hearing of the Federal Court of Australia and High Court
of New Zealand seeking orders in relation to the distribution of
client moneys held by Halifax commenced on Nov. 30, 2020 and
concluded on Dec. 9, 2020. Their Honours Justice Venning and
Justice Markovic have reserved their decision on the matter.
Under the Corporations Act, ASIC has the power to suspend or cancel
an AFS licence without holding a hearing in situations where the
AFS licence is held by a body corporate that is placed under
external administration, or that is being wound up.
The company has a right to seek a review of ASIC's decision at the
Administrative Appeals Tribunal.
OLD PORT: Second Creditors' Meeting Set for Jan. 20
---------------------------------------------------
A second meeting of creditors in the proceedings of Old Port Road
Pty Ltd has been set for Jan. 20, 2021, at 2:30 p.m. via
teleconference.
The purpose of the meeting is (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the Company
be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by Jan. 19, 2021, at 5:00 p.m.
Nathan Lee Deppeler and Ivan Glavas of Worrells Solvency & Forensic
Accountants were appointed as administrators of Old Port Road on
Dec. 4, 2020.
SPEEDCAST INT'L: Black Diamond May Submit Last Minute Offer
-----------------------------------------------------------
Steven Church of Bloomberg News reports that Black Diamond Capital
Management LLC may make a last-minute bid in the coming days for
bankrupt satellite services provider SpeedCast International Ltd.,
a lawyer for the hedge fund told a judge in federal court on
January 6, 2021.
Black Diamond is trying to get all of its questions about SpeedCast
answered before it decides how much, if anything, to offer for the
company, lawyer Albert L. Hogan said during a bankruptcy hearing
held by video. In December 2020, U.S. Bankruptcy Judge Marvin Isgur
halted a hearing on whether to approve a reorganization proposal
that would hand control to Centerbridge Partners LP.
About SpeedCast International
Headquartered in New South Wales, Australia, SpeedCast
International Limited and its affiliates provide remote and
offshore satellite communications and information technology
services. SpeedCast's fully-managed service is delivered to more
than 2,000 customers in 140 countries via a global, multi-access
technology, multi-band, and multi-orbit network of more than 80
satellites and an interconnecting global terrestrial network,
bolstered by on-the-ground local upport from more than 40
countries. Speedcast services customers in sectors such as
commercial maritime, cruise, energy, mining, government, NGOs,
enterprise, and media.
SpeedCast International and its affiliates sought protection under
Chapter 11 of the Bankruptcy Code (Bankr. S.D. Tex. Lead Case No.
20-32243) on April 23, 2020. At the time of the filing, the Debtors
each had estimated assets of between $500 million and $1 billion
and liabilities of the same range.
Judge David R. Jones oversees the cases.
Speedcast is advised by Weil, Gotshal & Manges LLP as global legal
counsel and Herbert Smith Freehills as co-counsel. Michael Healy of
FTI Consulting, Inc. is Speedcast's Chief Restructuring Officer,
and FTI Consulting, Inc. is Speedcast's financial and operational
advisor. Moelis Australia Advisory Pty Ltd and Moelis & Company LLC
are Speedcast's investment bankers. KCC is Speedcast's claims and
noticing agent.
The Office of the U.S. Trustee appointed a committee to represent
unsecured creditors in Debtors' bankruptcy cases. The committee is
represented by Hogan Lovells US, LLP.
On Aug. 13, 2020, the Debtor received a $395 million equity
commitment from Centerbridge Partners, L.P. and its affiliates, one
of its largest lenders.
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C H I N A
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YONGCHENG COAL: Financial Institutions Told to Rectify Behavior
---------------------------------------------------------------
Zhang Yuzhe and Timmy Shen at Caixin Global report that several
financial institutions that facilitated the shady bond issuances of
state-owned Yongcheng Coal and Electricity Holding Group Co. Ltd. -
that later defaulted and caused a bond market earthquake - have
been told by a bond market regulator to rectify their rule-breaking
behavior.
The National Association of Financial Market Institutional
Investors (NAFMII), a self-regulatory body under the central bank,
has sent warnings to Haitong Securities Co. Ltd., two of its
subsidiaries, and Donghai Fund Management Co. Ltd., asking them to
conduct rectification.
Caixin relates that NAFMII said that these firms were found to have
broken the rules when they underwrote bond issuances. Haitong
Securities ordered its subsidiaries to help the related issuer buy
a portion of its own offerings, the regulator said. Caixin has
previously learned from knowledgeable sources that the related
issuer in this case was Yongcheng Coal, and the purpose of such a
practice was to inflate its borrowing sizes and create a better
image to attract bond investors. The brokerage also helped the
issuer trade the bonds it issued, the regulator said.
Yongcheng Coal & Electricity Holding Group Co. Ltd. mines and
distributes coal products. The Company produces brown coal
products, bituminous coal products, hard coal products, coking coal
products, and other related products. Yongcheng Coal & Electricity
Holding Group also provides electric generation, apparel
processing, trade, and other related services.
The company defaulted on a CNY1 billion (US$152 million) bond on
November 10, 2020.
[*] CHINA: Record US$30BB Bond Defaults Seen Rising This Year
-------------------------------------------------------------
Bloomberg News reports that defaults by Chinese companies are
likely to top last year's record as tighter monetary policy
squeezes borrowers, according to China Merchants Securities Co.
Some 39 Chinese companies both domestically and offshore defaulted
on nearly $30 billion of bonds in 2020, pushing the total value 14%
above 2019's, Bloomberg discloses. Locally, delinquencies fell to
CNY137 billion ($21 billion) from CNY142 billion the previous year,
while offshore they rose to $8.6 billion from $3.9 billion.
"The central bank will implement more prudent monetary policies
this year," Bloomberg quotes Yuze Li, a credit analyst at China
Merchants Securities, as saying. "More companies may face
refinancing pressure. As the maturities jump, the default amounts
will climb by an estimated 10%-30% from the previous year," he
said, referring to both onshore and offshore defaults.
According to Bloomberg, China's strong economic recovery is giving
more room to the authorities to focus on reducing the amount of
debt in the financial system. That's renewed pressure on Chinese
companies: average monthly onshore defaults in the second half of
2020 rose by 47% to CNY13.6 billion from CNY9.2 billion in the
first half.
Bloomberg says the technology sector accounted for 28% of 2020's
total onshore defaults, led by state-linked Peking University
Founder Group Corp. The consumer industry was next, due to
Brilliance Auto Group Holdings Co.'s default, with CNY36 billion.
The financial sector came third with CNY26 billion.
In the dollar-bond market, the financial sector accounted for about
43% of total defaults, followed by technology and energy. Five
state-linked companies defaulted for the first time in the onshore
bond market, the most since 2016.
Over the past three years, Qinghai province has the worst default
ratio of 19.5%, followed by Hainan province, Liaoning province and
Ningxia region with more than 7% each, Bloomberg discloses. This
measure of borrowers' missed principal and interest payments as a
percentage of outstanding debt highlights areas with weaker
economies and poorer financial management.
Offshore, part of the focus by investors this year is on so-called
keepwell bonds. Some investors initiated legal action offshore
after Peking University Founder Group's restructuring administrator
rejected in August their requests to recognize claims on five
keepwell bonds backed by the defaulter. The parent firm of Tsinghua
Unigroup Co., a chipmaker backed by another prestigious Chinese
university, last month told a bondholder meeting that it doesn't
believe it's responsible for honoring repayment of Unigroup's
keepwell notes.
Bloomberg adds that the keepwell provision often involves a Chinese
company's pledge to keep an offshore subsidiary that is issuing the
bonds solvent -- but without any guarantee of payment to the
bondholders.
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I N D I A
=========
AHAN ADD-CHEM: CARE Reaffirms B+ Rating on INR15.13cr LT Loan
-------------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of Ahan
Add-Chem Private Limited (AACPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank
Facilities 15.13 CARE B+; Stable Reaffirmed
Detailed Rationale & Key Rating Drivers
The ratings assigned to the bank facilities of AACPL continue to
remain constrained on account of its small scale of operations with
net loss reported in FY20 (Provisional)(refers to the period from
April 1 to March 31), highly leveraged capital structure and weak
debt coverage indicators and stretched liquidity. The rating
further continues to remain constrained due to its presence in
competitive chemical industry and susceptibility of profit margins
to volatility in raw material prices.
The rating, however, continues to draw strength from experienced
promoters.
Rating Sensitivities
Positive factors
* Increase in scale of operations marked by TOI above INR30 crore
on sustained basis with similar improvement in cash accruals
* Improvement in capital structure as marked by overall gearing
below 2.00 times due to improvement in tangible net worth
Negative factors
* Any adverse change in government policies related to chemical
industry
* Withdrawal of support extended by promoters in the form of
unsecured loans
Detailed description of the key rating drivers
Key Rating Weakness
* Small scale of operations with net loss: AACPL has commenced its
operation from May 2018; hence FY19 was the first full year of
operations. During FY20 AACPL has reported the TOI of INR2.79 crore
(INR0.20 crore during 11MFY19) mainly on the back of stabilization
of operations, however remained small. AACPL has reported operating
loss of INR3.51 crore in FY20 due to lower TOI as well as higher
cost of material consumed. Further, due to higher depreciation
charges and interest costs AACPL has continued to report net losses
during FY20. AACPL has reported cash loss of INR5.29 crore during
FY20 (INR4.51 crore in FY19). Till
October 30, 2020, company achieved TOI of around INR6.13 crore.
* Highly leveraged capital structure and weak debt coverage
indicators: Capital structure of AACPL was highly leveraged owing
to negative net worth base as a result of accumulation of losses
during the year. On the back of reporting operating and cash loss
during the year, debt coverage indicators remained weak marked by
negative Total Debt to GCA ratio and interest coverage ratio.
However promoters are regularly infusing unsecured loan to meet its
debt repayment obligation as well as working capital requirement.
Promoters has infused additional unsecured loan of INR10.20 crore
in FY20 to meet interest payment, principal debt repayment
obligations and working capital requirements.
* Presence in competitive chemical industry: The Indian Chemical
Industry is characterized by high fragmentation and competitive
intensity, resulting from low capital intensity and technical
complexity along with lower product differentiation. However,
AACPL's promoters have developed good relationship in the market
through their previous association in other companies/firms.
* Susceptibility of profit margins to volatility in raw material
prices: AACPL's main raw materials include Bromination, Nitration,
Hyderogenation, Friedel Craft reactions and Organophosphinates
which account for nearly majority of its total cost of raw material
consumption and the same will be procured from the domestic market.
The prices of raw materials are market driven owing to which
operating margin remains volatile subject to market prices. Any
adverse fluctuation in the material prices is likely to impact the
profit margins of AACPL.
Key Rating Strengths
* Experienced promoters: Mr. Rakesh Saraiya has done B.E. Chemical
and holds experience of more than 20 years in the chemical industry
by serving as top management in few companies. whereas another
promoter, Mr. Kamlesh Shah, he has done chemical engineering from
USA, has successfully managed its family company named “BMS
Chemie", holds very good experience in import-export
activities and also served at various in Exim Club (An association
of Exporters and Importers in Gujarat).
Liquidity: Stretched
Liquidity of AACPL remained stretched marked by elongated working
capital cycle, low cash and bank balance and inadequate accruals to
meet repayment obligations. Working capital cycle has improved but
remained elongated at 57 days during FY20. Further, company has
reported cash loss of INR5.29 crore against rupee term loan
obligation of INR1.44 crore of FY21. However, directors have
infused unsecured loans to the tune of INR10.20 crore in FY20 and
INR0.60 crore in 7MFY21 in order to meet the working capital
requirements as well as debt obligations. Further, as per banker
interaction, working capital utilization remained at 60% for twelve
months ended November, 2020. Cash and bank balance remained very
low at INR0.01 crore as on March 31, 2020. CARE also takes
cognizance of the impact of COVID pandemic on the business
operations of the firm. The plant of company was closed from March
21, 2020 to May 4, 2020 during nationwide lockdown declared by
Government on account of Covid pandemic. AACPL has availed
moratorium benefit for interest servicing on Cash credit facility
from March 2020 to August 2020 in line with RBI announcement in
wake of Covid pandemic.
Vadodara (Gujarat) based Ahan Add Chem Private Limited was
incorporated in 2010 by Mr. Rakesh Saraiya, Mr Kamlesh Shah and
Mrs. Malini Sanghvi. The company was incorporated to undertake
manufacturing of organic chemicals (intermediate chemicals) which
are used in Pharmaceuticals, Chemical and Agrochemical industries.
The company had commenced its commercial operation from May 2018
onwards. AACPL is operating from its sole manufacturing unit
located at Padra, Dist. Vadodara, Gujarat having installed capacity
of plant is 828 MT per annum for manufacturing of organic
chemicals.
AMARAVATHI TEXTILES: ICRA Lowers Rating on INR113.99cr Loan to D
----------------------------------------------------------------
ICRA has revised the ratings on certain bank facilities of
Amaravathi Textiles Private Limited (ATPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based- 113.99 [ICRA]D; Revised from
Term Loan [ICRA]BBB- (Negative)
Fund-based- 97.26 [ICRA]D; Revised from
Working Capital [ICRA]BBB- (Negative)
Facilities
Non-fund 9.05 [ICRA]D; Revised from
Based Limits [ICRA]A3
Unallocated 31.06 [ICRA]D/[ICRA]D; Revised
Limits [ICRA]BBB- (Negative)/[ICRA]A3
Rationale
The ratings revision considers the delays in debt servicing
(principal and interest payments) by ATPL in Q3 FY2021 owing to its
poor liquidity position. The company's revenues and margins were
impacted by lockdown imposed to contain the spread of the Covid-19
pandemic and low demand in H1 FY2021, affecting its cash flows and
liquidity position. The company opted for moratorium on all its
debt obligations for the months March – August 2020 and applied
for restructuring in September 2020. However, the company withdrew
its request to restructure the loans in December 2020 and delayed
repayments of a few term loans post withdrawal of the request.
The company's revenues and margins would be impacted in FY2021,
despite the improving realisations since October 2020, because of
lower sales in H1 FY2021. Moreover, high inventory stocking
practice and delay in the release of interest and power subsidies
(~Rs. 47.9 crore as on March 31, 2020) resulted in high working
capital intensity of 48.0-51.0% over the years. ATPL's working
capital cycle is further impacted because of significant delays in
receivables from the state discom for its solar power plant, which
resulted in a poor liquidity position. The ratings also factor in
the susceptibility of margins to cotton and yarn price
fluctuations, and the highly fragmented industry structure,
restricting pricing flexibility and bargaining power to an extent.
The ratings, however, consider ATPL's healthy scale of operations
with an installed capacity of 139,728 spindles and 6,096 rotors and
its established track record in the spinning industry, leading to a
healthy customer base, aiding in repeat orders. Besides, its long
relationships with customers and suppliers, and presence in finer
counts of yarn with value-added capabilities (compact, gassed and
mercerised yarn) supported ATPL's volumes and earnings over the
years.
Key rating drivers and their description
Credit strengths
* Long track record of the company: The company has a healthy scale
of operations with an installed capacity of 139, 728 spindles and
6,096 rotors and an established presence in the knitting and woven
yarn markets of South India, having catered to the medium and finer
count requirements for more than three decades. ATPL's long
presence has also aided in establishing strong business links with
its key suppliers and customers, lending some pricing flexibility
and cost savings.
* Diversified product range with presence in value-added segments:
ATPL's product portfolio has been spread across medium and finer
counts, with the better value addition (compact, gassed and
mercerised yarn) supporting the operating margins in the business.
ATPL has presence across count ranges from 20s to 120s, which lends
some stability to volumes and earnings as various count ranges find
applications in different consumer segments, buffering the impact
of slowdown in any one segment.
Credit challenges
* Delays in debt servicing: The company delayed repayment of a few
term loans in Q3 FY2021. The company's revenues and margins were
impacted by lockdown imposed to contain the spread of the Covid-19
pandemic and low demand in H1 FY2021, affecting its cash flows and
liquidity position. The company opted for moratorium on all its
debt obligations for the months March–August 2020 and applied for
restructuring in September 2020. However, the company withdrew its
request to restructure the loans in December 2020 and delayed
repayments of a few term loans post withdrawal of the request
because of its poor liquidity position.
* Revenues and margins to be impacted in FY2021: The company's
revenues and margins would be impacted in FY2021 because of lower
sales in H1 FY2021. However, ICRA notes that realisations and
margins have been improving since October 2020, supporting the
overall margins for FY2021 to an extent. Nevertheless, the
company's coverage indicators would be impacted with estimated DSCR
of less than 1.0 times
* High working capital intensity: The company inventory holding is
high, which coupled with a delay in the release of interest and
power subsidies (~Rs. 47.9 crore as on March 31, 2020) resulted in
high working capital requirements at 48.0-51.0% of the operating
income over the years. Moreover, the company had witnessed delays
in payments from its customers, impacting its cash flows and
liquidity position.
* Intense competition in the industry: The spinning industry is
highly fragmented and competitive amid the presence of a number of
organised and unorganised players. Intense competition in the
industry and commoditised nature of the product limit ATPL's
pricing flexibility and bargaining power.
* Profitability exposed to fluctuation in cotton and yarn prices:
The company's profit margins are exposed to the fluctuation in
cotton and yarn prices, which depend on factors like seasonality,
monsoon condition, international demand and supply situation,
export policy etc. Further, it is exposed to the regulatory risks
as prices are decided through the minimum support price set by the
Government. Moreover, the company stocks cotton during the peak
season (November to March), which exposes it to the inventory
holding risk. Further, the risk is accentuated by the relatively
high inventory holding of ATPL compared to the average industry
levels mandated by its product range and presence in higher
counts.
Liquidity position: Poor
The company's liquidity is poor with the high repayment obligations
of INR12.0-15.0 crore and minimum buffer in working capital limits
(as working capital limits are fully utilised) owing to high
working capital intensity of more than 50.0%. The company missed on
few of the payments post withdrawal of the request for
restructuring of loans owing to its poor liquidity position.
Rating sensitivities
Positive triggers - ICRA could upgrade ATPL's ratings if the
company demonstrates timely debt servicing on a sustained basis and
improves its liquidity position.
Incorporated in 1983 and located in Prakasam district of Andhra
Pradesh, ATPL manufactures yarn with installed capacities of
139,728 spindles, 6,096 rotors and 104 gins. ATPL produces cotton
yarn in both hank and cone forms in the finer counts ranging from
60s to 120s for knitting as well as weaving segments largely in the
combed variety including value-added compact, gassed and mercerised
yarns. The company also produces open-ended coarse count yarn in
counts ranging from 16s to 28s. The company initially started with
12,576 spindles in 1985 and gradually expanded to the current
capacities. ATPL is promoted by Mr. K. Srinivasa Rao and his family
members.
B V PRABHUJEE: CRISIL Reaffirms B Rating on INR4.55cr LT Loan
-------------------------------------------------------------
CRISIL has reaffirmed its 'CRISIL B/Stable/CRISIL A4' ratings on
the bank facilities of B V Prabhujee (BVP).
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 1.50 CRISIL A4 (Reaffirmed)
Cash Credit 2.90 CRISIL B/Stable (Reaffirmed)
Long Term Loan 1.05 CRISIL B/Stable (Reaffirmed)
Proposed Long Term
Bank Loan Facility 4.55 CRISIL B/Stable (Reaffirmed)
The ratings factor in the firm's modest scale of operations with
volatility in operating margin, and exposure to geographical
concentration risk. These weaknesses are partially offset by the
extensive experience of the partners in the civil construction
business.
Key Rating Drivers & Detailed Description
Weaknesses:
* Modest scale of operations with volatile operating margin:
Revenue is expected to grow to INR24 crore in fiscal 2021, from
INR13.80 crore in fiscal 2020, thereby reflecting the modest scale
of operations. Operating margin too has fluctuated sharply between
12.3% and 17.5% over the three fiscals through March 2020, amidst
intense competition, tender-based nature of operations. The margin
is likely to be around 9.9% in fiscal 2021.
* Geographical contribution in revenue profile: BVP derives its
revenue primarily from Andhra Pradesh, and thus, remains
susceptible to any slowdown in announcement or execution of orders
in the state.
Strength:
* Extensive experience of the promoters: The
two-and-half-decade-long experience of the promoter, healthy
relationships with customers and suppliers, and benefits from
uninterrupted supply of raw materials and repeat orders, should
continue to support the business.
Liquidity: Stretched
Liquidity remains stretched, marked by high bank limit utilisation
and small cash accrual. Bank limit utilisation averaged 87% over
the 12 months through October 2020, and should may remain high. The
firm had availed first moratorium (March, April, May) on term loan.
Cash accrual of INR0.7-1.5 crore expected per fiscal in 2021 and
2022, should suffice to cover the term debt obligation of
INR0.27-0.50 crore each year.
Outlook Stable
CRISIL believes BVP will continue to benefit from the extensive
experience of its promoter, and healthy relationships with clients.
Rating Sensitivity factors
Upward factors
* Significant improvement in revenues with a growth of around
15-20% and stable operating margin of around 10%, leading to
improvement in net cash accrual
* Sustained improvement in working capital management supporting
key credit metrics
Downward factors
* Decline in revenue by 20%and operating margin by 300bps, leading
to lower net cash accrual
* Any large debt-funded capital expenditure weakening the capital
structure and debt protection metrics
Established in 1995 as a partnership firm, the Vizianagaram-based
BVP undertakes road and building construction projects in Andhra
Pradesh. Mr. BV Prabhujee is the managing partner.
DC WOVENSACK: ICRA Reaffirms B+ Rating on INR9.85cr Loans
---------------------------------------------------------
ICRA has reaffirmed ratings on certain bank facilities of DC
Wovensack Private Limited's (DCW), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term-
Cash Credit 3.25 [ICRA]B+(Stable); Reaffirmed
Long Term–
Unallocated 6.60 [ICRA]B+(Stable); Reaffirmed
Rationale
The rating reaffirmation takes into account DCW's small scale of
operations, modest profitability and moderate working capital
intensity of operations. The rating remains constrained by the
intense competition from the conventional plastic bag manufacturers
and the vulnerability of DCW's profitability to adverse
fluctuations in raw material prices.
The rating, however, continues to factor in the extensive
experience of the company's promoters spanning over a decade in the
woven sack manufacturing business, along with its comfortable
capital structure.
The Stable outlook on the [ICRA]B+ rating reflects ICRA's opinion
that DCW will continue to benefit from the extensive experience of
the company's promoters in the flexible packaging industry and
stabilisation in margins in the medium term.
Key rating drivers and their description
Credit strengths
* Extensive experience of promoter in woven sack industry: The
key promoter of DCW, Mr. Naval Kumar Agarwal, has a decade-long
experience in the woven fabric manufacturing business. Mr. Agarwal
has also been joined by his son, Mr. Harsh Agarwal recently to look
after the company's operations.
* Comfortable capital structure: The company's capital structure
remains comfortable as reflected by a gearing of 0.99 times as on
March 31, 2020. DCW has repaid its term loan in 9M FY2021. The
interest coverage ratio marginally improved to 3.70 times as on
March 31, 2020 from 3.53 times as on March 31, 2019.
Credit challenges
* Small scale of operations and moderate profitability: The
company's scale of operations has remained small with an operating
income (OI) of INR25.68 crore in FY2020, a decline of 3% over
FY2019. DCW achieved an OI of INR9.73 crore in H1 FY2021. Its OI is
further expected to decrease in FY2021 due to the Covid-19
pandemic-related challenges. Its operating profit margin moderated
to 7.35% in FY2020 compared to 9.17% in FY2019, owing to an
increase in employee and operating expenses. The net profitability
remained moderate in the range of 1.5% to 2.0% over the last three
financial years on account of high depreciation and interest
expenses.
* Moderate working capital intensity of operations: The working
capital intensity remained moderate as reflected by net working
capital to operating income (NWC/OI) of 20% as on March 31, 2020
(18% as on March 31, 2019) due to elongated receivables and high
inventory holding period. The inventory, however, improved to 33
days as on March 31, 2020 over 37 days as on March 31, 2019.
* Fragmented nature of industry with intense competition: The
Indian poly-woven sack industry produces an equivalent of ~1.2-1.3
million metric tonnes per annum (MMTPA) of polypropylene (PP) and
high density polyethylene (HDPE) bags. It is dominated by players
operating in the small and medium-scale sectors. Owing to the high
fragmentation and limited product differentiation, the competition
and pricing pressures are high. The company faces competition from
a number of organised and unorganised players in the domestic
market and hence, the pricing power remains limited.
* Profitability vulnerable to adverse fluctuations in raw
material prices: The company is exposed to the volatility in the
price of its key raw material, PP granules, which is linked to
international crude oil prices. Moreover, the raw material costs
constitute a major portion of the overall cost of manufacturing.
Hence, DCW's ability to pass on any increase in raw material prices
to the customers remains critical.
Liquidity position: Stretched
DCW's liquidity is stretched as on March 31, 2020 with weak cash
flow from operations due to low cash accruals and modest working
capital requirements. It has undrawn working limits of INR2.92
crore as on September 30, 2020. However, ICRA notes that the
company does not have any major capex plan or repayment obligations
over the near to medium term, which provides comfort.
Rating sensitivities
Positive triggers - Sustained improvement in scale and
profitability with improvement in working capital management.
Negative triggers - Higher-than-anticipated reduction in OI or
operating profitability could exert negative pressure on the
company's rating. Any deterioration in its liquidity may also exert
negative pressure on the rating.
Incorporated in 2012, DCW manufactures woven sacks, mainly used as
packaging material in the fertiliser, sugar, cement, food and
chemical industries. The company has a PP woven fabric
manufacturing unit at Pipodara village in Mangrol district of Surat
(Gujarat) with a total installed production capacity of 4,372 MTPA
of woven fabric. DCW reported a profit after tax (PAT) of INR0.38
crore on an OI of INR25.68 crore in FY2020, compared to PAT of
INR0.58 crore on an OI of INR26.48 crore in FY2019.
DEVDASHRATH INFRATECH: CRISIL Withdraws B+ on INR4.10cr Loan
------------------------------------------------------------
CRISIL has reaffirmed its ratings on the bank facilities of
Devdashrath Infratech Private Limited (DIPL) and subsequently
withdrawn the ratings at the company's request and on receipt of a
no-objection certificate from the bankers. The withdrawal is in
line with CRISIL's policy on withdrawal of bank loan ratings.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 8.95 CRISIL A4 (Rating Reaffirmed
and Withdrawn)
Cash Credit 3.90 CRISIL B+/Stable (Rating
Reaffirmed and Withdrawn)
Overdraft Facility 4.10 CRISIL B+/Stable (Rating
Reaffirmed and Withdrawn)
Proposed Overdraft 0.05 CRISIL B+/Stable (Rating
Facility Reaffirmed and Withdrawn)
Incorporated in August, 2018, and promoted by Mr. Tirath Raj Singh
Rathore and Mr. Raju Singh Bhati, DIPL collects royalty from mining
activities under contracts awarded by DMG, GoR. Under these
contracts, the company collects royalty from entities holding
leases for carrying out mining activities and pays a fixed amount
to DMG as per the contract. Depending on opportunities available,
it also supplies grids to road construction contractors.
DISH TV: CARE Puts B+ Rating on Watch With Negative Implications
----------------------------------------------------------------
CARE has placed the ratings of bank facilities of Dish TV India
Limited (DTIL) on 'Credit watch with negative implications' based
on disclosure by the company regarding demand letter from Ministry
of Information and Broadcasting for the disputed license fee
including interest accrued thereon amounting to INR4164.05 crore,
which is to be remitted within 15 days.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 984.80 CARE B+ (CE) Placed on
Facilities Credit Watch with Negative
Implications
Long Term/Short 397.88 CARE B+ (CE)/CARE A4 (CE)
Term Bank Placed on Credit watch with
Facilities Negative Implications
Detailed Rationale & Key Rating Drivers for the credit enhancement
of debt
The above ratings are based on the credit enhancement in the form
of unconditional and irrevocable corporate guarantee provided by
Dish TV India Ltd [DTIL; rated CARE A4 (Placed on credit watch with
negative implication)] to the lenders of Dish Infra Services
Private Limited (DISPL).
CARE in light of the above events is engaging with management to
understand its implications on overall financial risk profile of
the company and its subsidiary. As per the initial discussion with
the management, CARE understands that the matter regarding disputed
license fees is subjudice and pending before the Hon'ble High Court
of Jammu and Kashmir and the Hon'ble Supreme Court of India.
As per the management the Hon'ble High Court of Jammu and Kashmir
had allowed the company to continue making payment of the License
Fee as per order dated May 28, 2010 passed by the TDSAT. Further,
according to the management there would be no impact of the said
letter till the matter is finally decided by the respective courts.
However, CARE will continue to monitor the developments with regard
to the said order and will resolve the watch once the exact
implications of the above on the business and overall credit risk
profile of the company are clear.
The reaffirmation of ratings assigned to the bank facilities of
DTIL continue to factor in the reduced financial flexibility
consequent to high pledge of the promoter holding in its listed
group companies, the increasing competition faced both from peers
and allied technology platforms and highly regulated DTH industry.
Furthermore, the ratings also take into account the substantial
provision made by DTIL (consolidated) towards license fee, which
upon materialization would necessitate incremental debt funding.
The ratings also consider the decline in the subscriber base and
the quarter-on-quarter (q-o-q) decline in the average revenue per
user (ARPU) in FY20 and in H1FY21.
The ratings, however, continue to derive strength from DTIL's
leadership position in the Direct-to-Home (DTH) industry with net
subscriber base of 23.65 million translating to market share of
about 31% as on March 31, 2020.
Detailed Rationale & Key Rating Drivers of Dish Infra Services
Private Limited (Unsupported Rating)
The reaffirmation of ratings assigned to the bank facilities of
Dish Infra Services Private Limited (DISPL) continues to factor in
the weak credit profile of the company characterized by stretched
liquidity position and net loss reported by DISPL during FY20
(Audited). Furthermore, the ratings also take into account currency
risk associated with procurement of CPE and the increasing
competition faced both from peers and allied technology platforms.
The ratings also factor in decline in scale of operations due to
decline in gross installation and reduced capex.
The ratings, however, continue to derive strength from experience
of the management and DTIL's leadership position in the DTH
industry.
Rating Sensitivities
Positive Factors
* Favorable Supreme Court order on license dispute
* Release of pledge on the shares of DTIL
* Improvement in the operational performance of DTIL by way of
improved net subscriber additions
* Consolidated DSCR to be greater than 1.5x on sustained basis
Negative Factors
* Adverse ruling by Supreme court resulting in immediate payment
amounting to at-least INR3570crore
* Increase in total debt levels resulting in TOL/TNW greater than
5x
Detailed Description of the key rating drivers
Key Rating Weaknesses
* Decline in subscription revenue with muted growth in subscriber
base: Subscription revenue has remained on a declining trend in the
recent past due to lower spend on acquisition of new clients and
increased competition. Activation charges and subscription charges
are the two main components of subscription revenue. Due to the
liquidity issue faced by the group in the previous year, the
company had to reduce capex and operating expenses. Hence the
subscriber base of the company declined in FY20 on account of lower
capex which aids in the acquisition of subscribers. The growth has
also been tempered by the increasing competition faced both from
Doordarshan's Free Dish and its peers wherein competitive packs are
offered in the market to gain market share. Accordingly, amongst
the increasing competition faced, the ability of DTIL to maintain
its operating margins (PBILDT) without jeopardizing its market
share amongst the DTH players forms a key rating monitorable.
* Forex fluctuation risk: The CPEs rented/leased to the
subscribers are majorly imported from Korea due to marginal
presence of CPE manufacturers in India. In FY20, DISPL has been
importing CPE on cash basis on presentation of bills by the seller
or with usance of 60 days. After the adoption of Ind AS, DISPL does
not capitalize the forex gain/ loss as a fixed asset cost. Further,
due to repayment of buyer's credit facilities in FY20, forex loan
has reduced, thus reducing the impact of forex fluctuation. DISPL
generally follows a hedging policy to hedge 25% upfront at the time
of taking the forex loan (supplier's credit) and 25% within six
months due for loan repayment.
* High provisioning towards disputed regulatory dues: DTIL had
filed a petition before the Honorable Telecom Disputes Settlement &
Appellate Tribunal (TDSAT) regarding a demand letter received from
Ministry of Information & Broadcasting (MIB) alleging a short
payment in license fees paid. This has occurred due to
interpretational differences of the term 'Gross Revenue', basis
which license fees are paid. In the meanwhile, the company
continues to create a provision on a conservative basis. As on
March 31, 2020, DTIL has created a provision of INR3578crore (as on
March 31, 2020) (vis-a-vis INR3256.48 crore as on March 31, 2019).
Further, Ministry of Information and Broadcasting (MIB), vide its
letter dated December 24 2020, intimated DTIL that basis the
accounts of the company and payment made by the company towards
license fee from date of issuance of DTH License till Financial
Year 2018-19, an amount of INR4164.05crore (including the License
Fee payable and accrued interest) is payable by the company and has
directed the company to remit the same within a period of 15 days.
However, the MIB has mentioned that the amount is further subject
to verification and audit and the outcome of various court cases
pending before the TDSAT, the High Court of Jammu and Kashmir and
the Supreme Court of India, in the matter of DTH License fee.
As per the management the Hon'ble High Court of Jammu and Kashmir
had allowed the company to continue making payment of the License
Fee as per order dated May 28, 2010 passed by the TDSAT. Further,
according to the management there would be no impact of the said
letter till the matter is finally decided by the respective courts.
In the event the demand materializes, the company may have to raise
additional debt.
* Highly regulated industry: The industry is highly regulated
which could possibly affect the business model. In the recent past,
the industry witnessed some reforms like transition to the GST
regime and new tariff order. The National Tariff Order 2.0 issued
by the Telecom Regulatory Authority of India (TRAI) mandates the
service providers to provide 200 FTA channels at the base price of
INR153 (inclusive of taxes). DTH and cable TV distribution
providers have been mandated not to charge more than INR160 per
month for providing all channels available on their platform. Cap
on pay channels has now been kept at INR12 against INR19 in the
past. Further the sum of a-la-carte channels forming bouquet should
not exceed one and a half times of the bouquet's overall price.
Dish TV was the first in the industry to partially, and
voluntarily, roll out the provisions of the TRAI tariff order by
offering cost-effective channels to its subscribers.
Key Rating Strengths
* Experienced management: DTIL is promoted by Essel group having
its presence across media value chain including television
broadcasting, cable distribution, direct-to-home satellite service
and digital media amongst others, with ZEEL being the flagship
company. The chairman & managing director of the company Mr.
Jawahar Lal Goel has overall five decade of diversified experience
which includes entertainment industry as well. He has been the key
personnel in establishing the cable distribution network of various
TV channels and technological infrastructure for the implementation
of DTH services. He is well supported by experienced and qualified
management team.
* Strong brand presence with leadership position in DTH segment
and strong distribution network: DTIL has developed a strong
distribution network of ~4,000 distributors and over 400,000
dealers that span across 9,450 towns in the country. Post the
amalgamation of Vd2h into DTIL, DTIL continues to be a market
leader along with Tata Sky Limited holding 31% market share each
amongst the DTH players as on March 31, 2020. The merged company
had a net subscriber base of around 23.65 million as on March 31,
2020. Moderate capital structure The actual business performance
post-merger of DTIL and Videocon D2h has been lower than estimated.
Thus goodwill appearing in the books of DTIL has been impaired by
INR1563 crore as on March 31, 2019 and by INR1916 crore as on March
31, 2020 by the company. Despite erosion of net worth due to
impairment of goodwill, the overall gearing improved to 0.49x as on
March 31, 2020 as against 0.51x as on March 31, 2019, due to
reduction in total debt to INR1868crore as on March 31, 2020 as a
result of large scheduled repayments in the past
(PY:Rs.2809crore).
* Improved debt coverage indicators: Due to repayment of term
loans and lower utilization of limits, the overall debt of DTIL on
consolidated basis has reduced from INR2809crore as on March 31,
2019 to INR1868crore as on March 31, 2020. Reduced debt levels and
higher gross cash accruals led to improvement in total debt to GCA
from 1.70x in FY19 to 1.03x in FY20. Excluding provision created
for interest on license fee, the interest coverage has actually
improved from 5.17x in FY19 to 7.07x in FY20.
Liquidity: Moderate
The overall liquidity of the company is moderate due to moderate
cash accruals vis-à-vis repayment obligations and low cash balance
of INR146crore as on March 31, 2020 (vis-à-vis INR171 crore as on
March 31, 2019). Its capex requirements are modular which would be
funded through internal cash accruals. Average utilization of
DTIL's bank limits were at 20% for the 12 months ended June 2020.
Further in FY21, the company will have to make debt repayment of
INR1015crore and fund capex of INR600-650 crore, which the company
should be able to manage from internal accrual of INR2,000 crore.
Availability of additional bank limit will further support
liquidity over this period. Further, DISPL and DTIL had opted for
moratorium; however, the same has been fully repaid in July 2020.
Analytical approach: The ratings are based on the credit
enhancement in the form of unconditional and irrevocable corporate
guarantee provided by Dish TV India Ltd (DTIL; rated CARE A4) to
the lenders of Dish Infra Services Private Limited (DISPL).
Dish Infra Services Private Limited (DISPL) is wholly owned
subsidiary of Dish TV India Limited (DTIL). From April 1, 2015 (as
per scheme of demerger), Infrastructure & Support Business was
transferred from DTIL to its wholly owned subsidiary DISPL. The
Scheme will enable the management to streamline operations wherein
DTIL shall focus on branding and distribution while DISPL shall
focus on DTH related infrastructure and service related aspects.
For all the financial obligations raised by DISPL, an unconditional
and irrevocable corporate guarantee has been provided by DTIL.
DYNAMIC FINE: CARE Lowers Rating on INR22cr LT Loan to B+
---------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Dynamic Fine Paper Mill Private Limited (DFPMPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 22.00 CARE B+; Stable; ISSUER NOT
Facilities COOPERATING Revised from
CARE BB-; Stable and moved
to ISSUER NOT COOPERATING
category
Detailed Rationale & Key rating Drivers
CARE has been seeking information from DFPMPL to monitor the
ratings vide email communications dated May 18, 2020, June 10,
2020, July 15, 2020, August 24, 2020, September 4, 2020,
September 8, 2020, November 18, 2020 and December 24, 2020 and
numerous phone calls. However, despite repeated requests, the
company has not provided the requisite information for monitoring
the ratings. In line with the extant SEBI guidelines, CARE has
reviewed the rating on the basis of the best available information
which however, in CARE's opinion is not sufficient to arrive at a
fair rating. The rating on DFPMPL's bank facilities will now be
denoted as CARE B+; Stable; ISSUER NOT COOPERATING.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
The rating has been revised on account of non-availability of
requisite information.
The rating, further, continues to remain constrained on account of
its nascent stage of operations with moderate profitability
margins, leveraged capital structure and stretched liquidity
position. The rating is, further, constrained on account of highly
competitive industry along with susceptibility of profit margins to
volatility in raw material prices and project implementation
risk associated with it.
The rating, however, favorably takes into account experienced
management.
Detailed description of the key rating drivers
At the time of last rating on October 14, 2019, the following were
the rating strengths and weaknesses
Key Rating Weakness
* Nascent stage of operations and Moderate profitability margins:
The company started its commercial operations from January 2017 and
within short period of time; the scale of operations of the company
has ramped up. During FY19, Total Operating Income (TOI) of the
company stood at INR55.37 Crore, however, declined by 15.77% in
FY18 mainly on account of temporary shut-down of the factory for 25
days (October-November 2018) for modification towards quality
improvement as well as lower sales realization. During FY19, PBILDT
and PAT margin of the company stood moderate at 8.60% and 0.71%
respectively. Further, the company also registered net profit of
INR0.39 Crore as against net loss of INR0.19 crore due to higher
PBILDT margin.
* Leveraged Capital Structure: During FY19, the capital structure
of the company stood leveraged with overall gearing of 6.38 times
as on March 31, 2019 improved from 7.19 times in FY19 mainly on
account of accretion of profits to reserves and scheduled repayment
of term loan which is offset by increase in unsecured loans.
Further, the total debt to GCA stood moderate at 9.85 times in FY19
improved from 10.60 times in FY18 mainly on account of more
increase in GCA. Further, the interest coverage ratio also stood
moderate at 2.65 times.
* Project Implementation Risk: For supporting growing scale of
operations and to reduce costs, the company undertook a project to
set-up a small turbine of power generation on its existing boiler
capacity. The cost of the project is estimated to be INR1.78 Crore
which is to be financed through a term loan of INR1.00 Crore and
remaining through internal accruals and unsecured loans. The
project is estimated to be completed till March, 2020. However, the
financial closure is yet to be achieved.
* Highly competitive industry along with susceptibility to
volatility in prices of raw material: The company operates in
competitive segments of the industry due to low entry barriers.
There are numerous players in the unorganized sector which
increases the level of competition. Moreover, raw material cost
normally constitutes approximately 80% of the total cost of
production. Thus, margins are vulnerable to fluctuation in raw
material cost. Hence, the profitability of the company is based on
the ability of the company to absorb the increase in raw material
prices which will have an impact on the profitability margins and
sales realization.
Key Rating Strengths
* Experienced management: Mr. Madan Mohan Gupta is Chairman of
Dynamic Group and holds Law degree with an experience of more than
four decades in handling all activities of the business. He has
earlier worked for Railway as a registered 'A' Class Contractor and
has executed various railway projects .He laid the foundation of
the “Dynamic Group" in the year 1988 and set up a unit for
Railway Track Fitting material supply. His son, Mr. Shailendra
Gupta, is B.Tech in Civil and MBA and has an experience of more
than 25 years in handling and managing all the activities. He has
an expertise in the field of Construction, Fabrication and Finance
activities of the business. Another director, Mr. Mukesh Patidar,
supervising Operations department is B.Tech (Computer Science) by
qualification and has 5 years of experience in the paper making
industry. Further, they are supported by second tier management
with well experienced, qualified engineers and staff.
Liquidity: Stretched
The liquidity position of the company stood stretched marked by
elongated operating cycle of 81 days in FY19, increased from 54
days in FY18 owing to increase in collection and inventory holding
period. Due to high inventory, both the current ratio and quick
ratio stood below unity as on March 31, 2019. Further, during FY19,
the company has generated cash flow from operating activities of
INR4.65 crore as against INR3.14 crore in FY18 mainly on account of
lower creditors. Further, the company has been provided Covid-19
emergency fund of Rs 0.75 Crore and Rs 3.10 Crore and moratorium
facility as per RBI guidelines has not been availed by the
company.
Kota (Rajasthan) based Dynamic Fine Paper Mill Private Limited
(DFPMPL) was incorporated in 2013 by Mr. Madan Mohan Gupta and Mr.
Shailendra Gupta with an objective to set up plant for
manufacturing of kraft paper. It has started commercial operations
from 2017. The manufacturing facility of the company is located at
Village Polai Kalan, Kota having installed capacity of 30000 Metric
Tonne per annum (MTPA) as on March 31, 2019. The company procures
raw material i.e. waste paper mainly from local suppliers and
supplies finished products mainly through dealer's network in
Madhya Pradesh, Rajasthan and NCR.
EASTERN INDIA: ICRA Assigns B+ Issuer Rating
--------------------------------------------
ICRA assigns Issuer Rating of [ICRA]B+ (Stable) to Eastern India
Biofuels Private Limited (EIBPL).
Rationale
The rating assigned to EIBPL takes into account the significant
project-related risks to which the company is exposed, including
delays in achievement of financial closure, commissioning the
project within the budgeted cost and time, stabilising the plant,
and achieving the desired process parameters and cost efficiencies.
The company would have significant debt servicing obligations
compared to its projected cash accruals in the near to medium term.
EIBPL will also remain exposed to regulatory risks associated with
ethanol business.
Nevertheless, ICRA favorably considers the professional and
qualified management of the company with extensive experience in
various Central and state government agencies, along with the
private sector, and healthy demand scenario for ethanol in the
country. The project also enjoys locational advantage due to its
proximity to ample feedstock sources as well as its ability to
reach out to various unserved depots in Jharkhand, West Bengal as
well as other neighbouring states. ICRA also notes that EIBPL will
be entitled to receive various fiscal benefits under the National
Biofuel Policy 2018, which are likely to support its profitability
post commencement of operations.
The Stable outlook on the [ICRA]B+ rating reflects ICRA's belief
that the entity will continue to benefit from the extensive
experience of its promoters.
Key rating drivers and their description
Credit strength
* Qualified and professional promoters: The company's promoters
hold senior positions in sugar industry associations and companies
in the field. They also have extensive experience at senior
positions in various Government departments and public-sector
undertakings (PSUs). The experience includes working with the
Ministry of Consumer Affairs, Food and Public Distribution in
policy formulation for the sugar and ethanol sectors. Along with
corporate experience, the senior management has know-how of food
grain procurement and policy formulation. This experience has
helped the promoters put together a well-conceptualised project and
helped them choose a location with ample feedstock availability.
The location will also help the company to supply to various depots
that are at present situated in eastern Bihar, northern and Central
West Bengal, north eastern Jharkhand and some parts of Assam and
North-eastern states.
Credit challenges
* Inherent risks associated with greenfield projects: The project
plan envisages commencement of commercial operations from January
1, 2022. However, significant activities on the ground are yet to
be initiated. While the company has appointed an engineering
procurement and construction (EPC) contractor for the project at a
lump sum price, many of the activities are likely on financial
closure. Thus, there exist significant risks in terms of timely
commencement of operations.
* Sanction of term loan by bank(s) yet to be in place: The total
estimated cost of the project is INR104.89 crore, which will be
funded by term loan of INR71.50 crore. However, as on date, the
funding has not been sanctioned.
* Volatility in raw material prices could adversely impact
profitability: The primary raw materials of the company are maize
and broken rice. Thus, any change in the price of these commodities
could affect the profitability of the company.
Liquidity position: Stretched
The liquidity profile of the entity is likely to remain stretched.
Any delay in achieving financial closure might lead to a delay in
commissioning of the project, adversely impacting the business risk
profile of the entity.
Rating sensitivities
Positive triggers - Timely commencement of operations without
significant cost overruns would be a positive for the ratings.
Moreover, post start of commercial operations, sustained
improvement in scale and profitability leading to healthy cash
accruals could lead to an upgrade.
Negative triggers - Negative pressure on the rating could arise on
account of delay in commencement of operation or cost overruns or
in stabilisation of the company's operations.
EIBPL was incorporated on February 15, 2019 to manufacture grain
(maize and broken rice)-based ethanol. The company is setting up a
65-kilo litres per day (KLD) grain-based ethanol distillery along
with 2.5-MW captive power generation plant in Purnia, Bihar.
ENVIIRO BUILDMATE: ICRA Withdraws B- Rating on INR26cr Loan
-----------------------------------------------------------
ICRA has withdrawn the ratings on certain bank facilities of
Enviiro Buildmate Private Limited (EBPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term–Fund 26.00 [ICRA]B-(Stable); Withdrawn
Based/Cash Credit
Long Term/Short 4.00 [ICRA]B-(Stable)/[ICRA]A4;
Term–Unallocated Withdrawn
Limits
Rationale
The outstanding ratings of [ICRA]B-(Stable) and [ICRA]A4 on the
INR30.00 crore bank facilities of EBPL have been withdrawn at the
request of the company and based on the no dues certificate
provided by its banker, and in accordance with ICRA's policy on
Withdrawal and Suspension of Credit Rating.
ICRA does not have adequate information to suggest that the credit
risk has changed since the time the ratings were last
reviewed.
Key rating drivers and their description
Key rating drivers have not been captured as the ratings are being
withdrawn.
Liquidity position: Adequate
Not captured as the ratings are being withdrawn.
Rating sensitivities
Not captured as the ratings are being withdrawn.
Established in year 2006, EBPL is engaged in trading of steel and
allied building materials in the Pune region. The company belongs
to the VTP group which is one of the established real estate groups
in Pune. V T Palresha And Company Private Limited (VTP) is a group
company of EBPL and is engaged in trading of cement and allied
building materials in the Pune region. EBPL generates a large
portion of its revenues from steel trading while the contribution
from trading of cement and other building material to revenues
remains marginal. The company also provides material transportation
services to its clients.
ETHELBARI TEA: ICRA Reaffirms B+ Rating on INR5.50cr Loan
---------------------------------------------------------
ICRA has reaffirmed ratings on certain bank facilities of The
Ethelbari Tea Company (1932) Ltd. (TETCL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based–
Working Capital 5.50 [ICRA]B+ (Stable); Reaffirmed
Non-Fund based–
Bank Guarantee 0.10 [ICRA]A4; Reaffirmed
Rationale
The reaffirmation of the ratings considers the small scale of
operations and low net worth base of TETCL. The ratings also
consider the weak financial profile of the company, characterised
by low profitability as well as cash accruals, a leveraged capital
structure and depressed level of coverage indicators. The ratings
are also impacted by the risks associated with tea for being an
agricultural commodity, which depends on agro-climatic conditions.
Besides, the inherent cyclicality of the fixed-cost intensive tea
industry leads to variability in profitability and cash flows of
bulk tea producers such as TETCL. The presence of both the gardens
in North Bengal further accentuates agro-climatic risks. In
addition, domestic tea prices are influenced by international
prices. Hence, the demand-supply situation in the global tea
market, in ICRA's opinion, would continue to have a bearing on the
profitability of Indian players, including TETCL.
The ratings, however, favorably consider the long experience of the
management in the tea industry. The ratings also derive comfort
from the favorable age profile of TETCL's tea bushes with around
84% of the bushes in the productive age bracket of 5-50 years. This
leads to better productivity, which mitigates the risks associated
with the fixed-cost intensive nature of the tea plantation business
to some extent. ICRA notes that tea price has
witnessed a sharp improvement in the current fiscal, which would
have some positive impact on the profits and cash accruals of the
company in FY2021. However, the extent of sustainability of such
price improvement, going forward, remains to be seen.
The Stable outlook on the [ICRA]B+ rating reflects ICRA's opinion
that TETCL will continue to benefit from the experience of the
management in the tea industry.
Key rating drivers and their description
Credit strengths
* Long experience of the management in the tea industry:
Incorporated in 1932, the company was taken over by the current
management in 2011. The day-to-day operations of the company are
managed by Mr. Mahendra Patel, who has been associated with the tea
industry for around five decades.
* Favorable age profile of bushes mitigates risks associated with
the fixed-cost intensive nature of the bulk tea industry to some
extent: The favorable age profile of TETCL's bushes, with around
84% of the same in the age group of 5-50 years, results in high
yield of the company's tea estate. This positively impacts the cost
structure due to the fixed-cost intensive nature of the industry.
Credit challenges
* Small scale of operations and low net worth base: The company's
scale of operations remained at a small level, with an operating
income of INR14.95 crore in FY2020 compared to INR13.20 crore in
FY2019. ICRA also notes that TETCL's net worth remained at INR0.74
crore as on March 31, 2020 compared to INR0.22 crore as on March
31, 2019.
* Weak financial profile characterised by a highly leveraged
capital structure and depressed coverage indicators: The
realisation of tea witnessed a marked improvement in the current
fiscal, which would have some positive impact on the profitability
of the company in FY2021. However, the extent of sustainability of
such price improvement, going forward, remains to be seen. ICRA
notes that the capital structure of the company continued to remain
leveraged, as depicted by a gearing of 7.63 times as on March 31,
2020. Low profitability as well as cash
accruals have kept the coverage indicators depressed, as reflected
by NCA/total debt of 12.3% and TD/OPBDITA of 4.89 in FY2020.
* Risks associated with tea for being an agricultural commodity:
Tea production is primarily dependent on agroclimatic conditions
and thus remains exposed to various agro-climatic risks. The
presence of the company's gardens at a single location in North
Bengal exposes TETCL to geographical concentration risk and
vulnerability to agro-climatic conditions.
* Prices of Indian tea remain vulnerable to price fluctuation in
the international market: Notwithstanding a large domestic
consumption base that India has, exports play a vital role in
maintaining the overall demand-supply balance in the domestic
market. Healthy export realisation is also crucial for maintaining
domestic realisations as unremunerative prices in the export market
may lead to exporters dumping the produce in the domestic market,
which in turn would exert pressure on domestic prices. Hence, the
demand-supply situation in the global tea market, in ICRA's
opinion, would continue to have a bearing on the profitability of
Indian players, including TETCL.
Liquidity position: Stretched
The company's liquidity profile is expected to remain stretched on
account of high utilisation of working capital limits, which stood
at 89% during the last 15 months ending November 2020. The cash
flow from operations remained positive in the last three years,
though the same remained low. ICRA notes the presence of scheduled
long-term debt servicing obligations in the near term, which would
exert pressure on its cash flows.
Rating sensitivities
Positive triggers - ICRA may upgrade TETCL's ratings if the company
is able to increase its scale of operations substantially while
improving profitability, capital structure, and coverage
indicators, on a sustained basis. The ratings may also be upgraded
in case of a substantial increase in its net worth level.
Negative triggers - Pressure on TETCL's rating may arise if there
is a decline in profitability and/or in case of unfavorable
industry scenario, adversely impacting the business risk profile of
the company.
Incorporated in 1932, TETCL produces black tea of CTC (crush, tear,
curl) variety, which it sells in the domestic market through a mix
of auction and private sales. The company was taken over by the
current management in 2011. The company has two gardens, Ethelbari
and Sarugaon tea estate, located in the Alipurduar district of West
Bengal, with a total area of around 994 hectares.
GOKAK SUGARS: ICRA Withdraws B Rating on INR0.53cr Term Loan
------------------------------------------------------------
ICRA has withdrawn the ratings on certain bank facilities of Gokak
Sugars Limited (GSL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based–
Term Loan 0.53 [ICRA]B (Stable); Rating
Withdrawn
Rationale
The outstanding rating of [ICRA]B (Stable) on INR0.53 crore bank
facilities of GSL has been withdrawn at the request of the company
and based on the no dues certificate provided by its banker, and in
accordance with ICRA's Policy on Withdrawal and Suspension of
Credit Rating. ICRA is withdrawing the rating and it does not have
adequate information to suggest that the credit risk has changed
since the time the rating was last reviewed.
Key rating drivers and their description
Key rating drivers have not been captured as the rating is being
withdrawn.
Liquidity position
Liquidity position has not been captured as the rating is being
withdrawn.
Rating sensitivities
Rating sensitivities have not been captured as the rating is being
withdrawn.
Incorporated in 2000, GSL is a Belgaum (Karnataka) based sugar
manufacturing company with a 4,200-TCD cane crushing plant. The
plant is forward integrated with a 14-MW co-generation unit. The
company was initially set up by local promoters. Subsequently, SRSL
acquired 87% stake in the company in October 2008 for INR69.3 crore
funded primarily through external debt. SRSL has gradually
increased its equity holding in GSL to about 93.64% as on date with
the remaining equity held by one of the original promoters. In
FY2020, the company reported a net profit of INR7.26 crore on an
operating income (OI) of INR238.06 crore compared to a net profit
of (-) INR38.46 crore on an OI of INR193.42 crore in the previous
year.
GURUKRUPA METALS: ICRA Keeps B- on INR10cr Debt in Not Cooperating
------------------------------------------------------------------
ICRA said the rating for the INR10.00 crore bank facilities of
Gurukrupa Metals continues to remain under the 'Issuer Not
Cooperating' category. The rating is denoted as [ICRA]B-(Stable)
ISSUER NOT COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund based- 10.00 [ICRA]B- (Stable) ISSUER NOT
Cash Credit COOPERATING; Rating Continues
to remain under 'Issuer Not
Cooperating' category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA, the
entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis best available/dated/
limited information on the issuers' performance. Accordingly, the
lenders, investors and other market participants are advised to
exercise appropriate caution while using this rating as the rating
may not adequately reflect the credit risk profile of the entity.
The rating action has been taken in accordance with ICRA's policy
in respect of non-cooperation by a rated entity available at
www.icra.in.
Gurukrupa Metals (GM) is a metal merchant based in Jamnagar,
Gujarat and has been in operations since September 2011. The firm
primarily trades imported non-ferrous metallic scrap, such as brass
scrap, ingots, copper alloys and zinc in and around Jamnagar.
J S SPINTEX: CARE Lowers Rating on INR16.74cr LT Loan to B
----------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of J.S.
Spintex Limited (JSSL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 16.74 CARE B; ISSUER NOT COOPERATING;
Facilities Rating continues to remain
under ISSUER NOT COOPERATING
category and Revised from
CARE B+
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated October 23, 2019, placed the
rating of JSSL under the 'issuer non-cooperating' category as JSSL
had failed to provide information for monitoring of the ratings.
JSSL continues to be non-cooperative despite repeated requests for
submission of information through e-mails, phone calls and a
letter/email dated December 14, 2020, December 10, 2020, December
9, 2020 and December 8, 2020. In line with the extant SEBI
guidelines, CARE has reviewed the rating on the basis of the best
available information which however, in CARE's opinion is not
sufficient to arrive at a fair rating.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above ratings.
Detailed description of the key rating drivers
The revision in the rating takes into account the non-availability
of requisite information due to noncooperation by J S Spintex
Limited with CARE's efforts to undertake a review of the
outstanding ratings as CARE views information availability risk as
key factor in its assessment of credit risk profile. The rating has
been revised on account of deteriorating profitability margins,
susceptibility of operating margins due to raw material price
fluctuation risk, highly competitive and fragmented industry with
susceptibility to government regulations and small scale of
operations. However, the rating derives strength from increasing
scale of operations and moderate overall solvency position and
comfortable operating cycle.
Key Rating Weaknesses
* Deteriorating profitability margins in FY19: The PBILDT margins
deteriorating from 8.88% in FY18 to 6.55% in FY19. The PAT margins,
however, remained at 0.54% in FY19 (PY: 0.55%).
* Susceptibility of operating margins due to raw-material price
fluctuation risk: Historical data shows that the prices of raw
cotton and cotton yarn have moved in the same direction. It has
been observed in the past that the raw cotton prices are
susceptible to high price volatility owing to cotton being a
seasonal crop and the availability is dependent upon vagaries of
nature. Thus, the above factors exposes operating margin of cotton
yarn manufacturers to price volatility risk.
* Highly competitive and fragmented industry with susceptibility
to government regulations: Cotton yarn business in India is highly
fragmented with presence of a large number of small and medium
scale units. Due to high degree of fragmentation, small players
hold very low bargaining power against both its customers as well
as its suppliers resulting in such companies operating at low
profit margins. The yarn prices are regulated by demand-supply
market position, which in turn limits the bargaining power of the
yarn manufactures
Key Rating Strengths
* Increasing scale of operations: The scale of operations
increased with a TOI of INR59.39 in FY18 to INR72.30 in FY19.
* Moderate overall solvency position: The capital structure of
the firm remained moderate marked by overall gearing of 1.38 times
as on March 31, 2019 (PY: 1.26x). The total debt to GCA ratio stood
moderate and improved on a year on year basis marked by 4.99x, as
on March 31, 2019 (PY: 5.14x). The PBILDT interest coverage ratio
improved on a year on year basis marked by 3.66x in FY19 (PY:
2.41x).
* Comfortable operating cycle: The operating cycle of the company
stood comfortable at 15 days as on March 31, 2019.
J.S. Spintex Limited (JSSL), based in Samana (Punjab), was
incorporated in August, 2012 as a public limited company. It
commenced operations in January, 2014. The company is currently
being managed by Mr. Parminder Singh and Mr. Amandeep Singh. JSSL
is engaged in manufacturing of coarse cotton yarn at its
manufacturing plant located in Samana, Punjab, with total installed
capacity of 4,500 MT per annum, as on June 09, 2016. The company
manufactures yarn of different counts ranging from 18's to 24's
depending upon the customer requirement. The yarn supplied by the
company is used as raw material for manufacturing bed sheets, terry
towel, foot-mats, suiting cloth, etc.
JAI BHARAT: ICRA Keeps B+ Debt Ratings in Not Cooperating
---------------------------------------------------------
ICRA said the ratings for the INR29.07 crore bank facilities of Jai
Bharat Steel Industries continue to remain under the 'Issuer Not
Cooperating' category. The rating is denoted as
[ICRA]B+(Stable)/[ICRA]A4; ISSUER NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Cash Credit 0.50 [ICRA]B+ (Stable) ISSUER NOT
COOPERATING; Rating Continues
to remain under 'Issuer Not
Cooperating' category
Letter of Credit 18.00 [ICRA]A4 ISSUER NOT
COOPERATING; Rating continues
to remain under 'Issuer Not
Cooperating' category
Credit Exposure 0.37 [ICRA]A4 ISSUER NOT
Limit COOPERATING; Rating continues
to remain under 'Issuer Not
Cooperating' category
Unallocated 10.20 [ICRA]B+ (Stable)/[ICRA]A4
limit ISSUER NOT COOPERATING;
Rating Continues to remain
Under 'Issuer Not Cooperating'
Category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA, the
entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis best
available/dated/limited information on the issuers' performance.
Accordingly, the lenders, investors and other market participants
are advised to exercise appropriate caution while using this rating
as the rating may not adequately reflect the credit risk profile of
the entity. The rating action has been taken in accordance with
ICRA's policy in respect of non-cooperation by a rated entity
available at www.icra.in.
Jai Bharat Steel Industries (JBSI), a partnership firm incorporated
in 1984 by Mr. Ashok Bansal and Mr. Praveen Bansal, to carry out
rolling mill operations. Later in 1994, it increased its operation
domain through backward integration into shipbreaking activities.
The firm operates a 30m X 45m plot at the Alang shipbreaking yard
and has its rolling mill operations at GIDC Sihor, Bhavnagar. The
rolling mill has a processing capacity of 250 MT/month.
JAIN IRRIGATION: CARE Migrates D Debt Ratings to Not Cooperating
----------------------------------------------------------------
CARE Ratings has migrated the rating on bank facilities of Jain
Irrigation Systems Limited (JISL) to Issuer Not Cooperating
category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 2,433.20 CARE D; ISSUER NOT COOPERATING
Facilities Rating moved to Issuer Not
Cooperating category
Short Term Bank 2,220.00 CARE D; ISSUER NOT COOPERATING
Facilities Rating moved to Issuer Not
Cooperating category
Detailed Rationale & Key Rating Drivers
JISL has not paid the surveillance fees for the rating exercise
agreed to in its Rating Agreement. In line with the extant SEBI
guidelines, CARE's rating on JISL.'s bank facilities will now be
denoted as CARE D; Issuer Not Cooperating.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
The ratings factor in classification of the account as NPA. CARE
takes cognizance of the fact that company is undergoing
restructuring and a resolution plan.
Detailed description of the key rating drivers
At the time of last rating on October 10, 2019 the following was
the key rating weakness:
* Ongoing delays in debt servicing: As a part of CARE's due
diligence process, CARE had interacted with JISL's bankers and had
also obtained 'Default if any' statement from the company which
mentioned delays in debt servicing on the working capital and term
loan availed by the company. As per the management, the delays in
debt servicing is on account of slowdown in collection of
receivables leading to cash flow issues in the company. Further,
the lenders of JISL have also signed an Inter-Creditor agreement
due to the ongoing stress in the account. CARE also notes that JISL
is in discussion with banks for increase in working capital limits
to address their immediate liquidity concerns which are yet to be
sanctioned by banks.
Analytical approach: Consolidated
CARE has analyzed JISL's credit profile by considering the
consolidated financial statements of the company owing to financial
and operational linkages between the parent and subsidiaries. The
details of the subsidiaries, associate and joint venture which have
been consolidated as on March 31, 2020.
Established in the year 1986, JISL operates in diverse segments of
the agri-business and also offers products in renewable energy
segment. The micro-irrigation systems (MIS) (drip and sprinkler) is
the flagship product of the company wherein JISL offers
end‐to‐end water solution projects. The company also
manufactures polyethylene (PE) pipes, polyvinyl chloride (PVC)
pipes and plastic sheets. Other business segment of the company
incudes, agro-processing (dehydrated onions & vegetables, processed
fruits, mango pulp and Bio Gas), tissue culture and solar systems
(solar water heating systems, solar panels and solar water pumps).
The company (including subsidiaries) has 33 manufacturing bases
with 11 manufacturing facilities and 5 demo and research
development farms in India and 17 plants located across four
continents.
JAMMU MOTORS: CARE Lowers Rating on INR8.30cr LT Loan to B
----------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Jammu Motors Private Limited (JMPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 8.30 CARE B; Stable; ISSUER NOT
Facilities COOPERATING; Rating continues
to remain under ISSUER NOT
COOPERATING category and
Revised from CARE B+; Stable
Short Term Bank 0.20 CARE A4; ISSUER NOT
Facilities COOPERATING; Rating continues
to remain under ISSUER NOT
COOPERATING category
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated October 24, 2019, placed the
rating of JMPL under the 'issuer non-cooperating' category as JMPL
had failed to provide information for monitoring of the ratings.
JMPL continues to be non-cooperative despite repeated requests for
submission of information through e-mails, phone calls and a
letter/email dated December 21, 2020, December 20, 2020, and
December 19, 2020.In line with the extant SEBI guidelines, CARE has
reviewed the rating on the basis of the best available information
which however, in CARE's opinion is not sufficient to arrive at a
fair rating.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above ratings.
Detailed description of the key rating drivers
The revision in the rating takes into account the non-availability
of requisite information due to noncooperation by Jammu Motors
private Limited with CARE's efforts to undertake a review of the
outstanding ratings as CARE views information availability risk as
key factor in its assessment of credit risk profile. The rating has
been revised on account of low profitability margins, deteriorating
capital structure and intense competition from alternative brands.
However, the ratings derive strength from increasing scale of
operations and moderate debt coverage indicators.
Key Rating Weaknesses
* Low profitability margins: The profitability margins of the
company continued to remain low marked by PBILDT margin and PAT
margin of 2.48% and 1.09% respectively, in FY19.
* Deterioration in capital structure: The capital structure of
the company stood leveraged and deteriorated on a year on year
basis marked by overall gearing ratio of 1.59x as on March 31, 2019
(PY: 1.50x).
* Intense competition from alternative brands: JMPL is an
authorized dealer of BAL, FIPL and MSIL. With these OEM focusing on
expanding their dealership network, also resulting in increased
competitive intensity within its own dealers. Further, the
competition in PV segment is high with other companies like Honda
Motors India Private Limited, Hyundai Motor India Limited etc.
launching new models at competitive prices.
Key Rating Strengths
* Increasing scale of operations: The total operating income of
the company increased from INR181.19 crore in FY18 to INR207.79
crore in FY19.
* Moderate debt coverage indicators: The debt coverage indicators
of the company also stood moderate marked by total debt to GCA
ratio and interest coverage ratio of 5.35x, as on March 31, 2019
(PY: 5.48) and 3.26x in FY19. (PY: 3.14x).
Jammu Motors Private Limited (JMPL) was incorporated in 1996 by Mr
Sanjay Aggarwal. The company was appointed as an authorized dealer
of Bajaj Auto Limited (BAL) for its two and three wheelers vehicles
in Jammu. Subsequently, in the year 2000, the company was also
appointed as an authorized dealer of Ford India Private Limited
(FIPL). Further in April, 2015 the company has successfully
executed the project to establish a new showroom for vehicles of
Maruti Suzuki India Limited (MSIL) in Jammu. The company currently
operates from its three showrooms in Jammu.
KARDA CONSTRUCTIONS: ICRA Cuts Rating on INR31cr LT Loan to D
-------------------------------------------------------------
ICRA has revised the ratings on certain bank facilities of Karda
Constructions Limited ('KCL'), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term-Fund- 31.00 [ICRA]D; Downgraded from
based–Term Loan [ICRA]BB-& and removed
from watch
Long-term-Fund- 33.00 [ICRA]D; Downgraded from
based–Cash Credit [ICRA]BB-& and removed
from watch
Long Term/Short 36.00 [ICRA]D/[ICRA]D; Downgraded
Term-Fund based/ from [ICRA]BB-&/[ICRA]A4&
Non-fund based and removed from watch
Long Term–NCD/Debt 50.00 [ICRA]D; Downgraded from
[ICRA]BB-& and removed from
Watch
& - under ratings watch with developing implications
Rationale
The rating action reflects the recent delays in servicing of the
debt obligations by KCL driven by material weakening of the
company's liquidity profile arising from slow collections and
sluggish bookings. ICRA, in October 2020, had placed the ratings on
watch with developing implications, given that KCL had applied for
restructuring of the loan on the due date, and had subsequently
missed its repayment obligations on its sanctioned term loan which
was due on 30th September 2020 and the same was confirmed by the
bank on October 4, 2020.
ICRA hence, had not recognized the missed payment as default in
accordance with the rating approach published in September 2020.
ICRA, however now, has confirmed with the company as well as lender
that the no restructuring plan has gone through. Given the dues
outstanding as of 30th September 2020, were paid in tranches and
dues as of 31st December 2020 still remain overdue, the same has
been recognized as default.
However, the ratings factor in the established track record and the
extensive experience of its promoters in realestate development in
Nashik.
Key rating drivers and their description
Credit strengths
* Established track record and extensive experience in real-estate
development: Karda is promoted by Mr. Naresh Karda, who is a civil
engineer by qualification and is the Managing Director of the
company. Collectively the Karda Group has developed over 21-lakh
square feet of area with all the projects based in Nashik,
Maharashtra. The promoters of the Group have extensive experience
in the real estate and construction business and the company
has in-house project management capabilities. It is a reputed
player in Nashik with vast experience and knowledge of the local
market dynamics, giving it a competitive edge.
Credit challenges
* Delays in debt servicing due to liquidity issues: The firm was
not able to service its debt obligations in timely and regular
manner due to delay in receipt of pending receivables from its
customers. Hence its account was moved to special mention accounts
(SMA) category by the bank on January 1, 2021. Weak inflow of
customer advances coupled with low sales led to deterioration in
the liquidity position of the company.
* Exposed to inherent project execution and moderate marketing
risk, risk heightened in the current pandemic Scenario: There are
several ongoing projects including residential as well as
residential-cum-commercial and sole commercial ones too. The
current pandemic scenario has further accentuated the project
execution and marketing risks associated with these projects.
* Geographical concentration risk with presence limited to Nashik:
The company has moderate scale of operations and is involved in
residential and commercial project construction in Nashik,
Maharashtra. Its presence in only one city exposes Karda to
geographical concentration risk. However, diversification across
all housing segments reduces the exposure to demand volatility and
competition in any particular segment.
* Intense competition and inherent cyclicality in real estate
industry: Being a cyclical industry, real estate is highly
dependent on macro-economic factors, which make the company's sales
vulnerable to downturn in real-estate demand and competition from
regional established developers.
Liquidity position: Poor
Liquidity is poor given the delays in servicing debt obligations
led by issues faced by the company in getting timely collections
from its customers and sluggish sales.
Rating sensitivities
Positive triggers - ICRA could upgrade the rating in case of
regularization in debt servicing on a sustained basis for more than
three months.
Negative triggers - Not applicable
Incorporated in 2008, KCL is involved in the development of
residential as well as commercial real estate projects. The company
is promoted by Mr. Naresh Karda, who is the managing director of
the company and a civil engineer by qualification. A major number
of the projects of the Group are residential with homes ranging
from 1BHK apartments to penthouses. The company is listed on NSE
and BSE.
In FY2020, the company reported a net profit of INR9.64 crore on an
operating income of INR114.12 crore, compared to a net profit of
INR12.10 crore on an OI of INR105.30 crore in FY2019. Further, in
H1 FY2021, the company reported a net profit of INR3.85 crore on an
operating income of INR36.44 crore.
KHUDIRAM COLD: CRISIL Keeps B Debt Ratings in Not Cooperating
-------------------------------------------------------------
CRISIL said the ratings on bank facilities of Khudiram Cold Storage
Private Limited (KCSPL) continue to be 'CRISIL B/Stable/CRISIL A4
Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 0.10 CRISIL A4 (Issuer Not
Cooperating)
Cash Credit 3.69 CRISIL B /Stable (Issuer Not
Cooperating)
Long Term Loan 4.90 CRISIL B/Stable (Issuer Not
Cooperating)
Working Capital 0.97 CRISIL B/Stable (Issuer Not
Loan Cooperating)
CRISIL has been consistently following up with KCSPL for obtaining
information through letters and emails dated June 29, 2020 and
December 18, 2020 among others, apart from telephonic
communication. However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of KCSPL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes that rating action on KCSPL is consistent
with 'Assessing Information Adequacy Risk'. Based on the last
available information, the ratings on bank facilities of KCSPL
continues to be 'CRISIL B/Stable/CRISIL A4 Issuer not
cooperating'.
KCSPL was incorporated in 2004 to provide cold storage facility to
the potato farmers and traders. The company commenced commercial
operations in 2006. KCSPL is owned by the Midnapore (West
Bengal)-based Manna family having extensive experience of a decade
in cold storage industry and over two decades in potato trading.
KIKANI INT'L: CARE Lowers Rating on INR3cr LT Loan to B
-------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of
Kikani International Private Limited (KIPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 3.00 CARE B; Stable; ISSUER NOT
Facilities COOPERATING Rating continues
to remain under ISSUER NOT
COOPERATING category and
Revised from CARE BB-; Stable
Short Term Bank 22.00 CARE A4; ISSUER NOT COOPERATING
Facilities Rating continues to remain
under ISSUER NOT COOPERATING
Category
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated November 29, 2019, placed
the rating(s) of KIPL under the 'issuer not-cooperating' category
as KIPL had failed to provide information for monitoring of the
rating as agreed to in its Rating Agreement. KIPL continues to be
non-cooperative despite repeated requests for submission of
information through e-mails, phone calls and a letter/email dated
December 7, 2020, December 10, 2020 and December 18, 2020. In line
with the extant SEBI guidelines, CARE has reviewed the rating on
the basis of the best available information which however, in
CARE's opinion is not sufficient to arrive at a fair rating.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
The revision in rating factors in non-cooperation by KIPL and
CARE's efforts to undertake a review of the ratings outstanding.
CARE views information availability risk as a key factor in its
assessment of credit risk.
Detailed description of the key rating drivers
At the time of last rating on November 28, 2019 the following were
the rating strengths and weaknesses (updated for the information
available from Registrar of Companies):
Detailed description of the key rating drivers
* Relatively modest scale of operations with fluctuations over
last 3 years: The scale of operations of KIPL stood relatively
modest, given the cotton yarns & fabrics manufacturing nature of
operations. Moreover, the same has been fluctuating in the range of
INR84.14 crore to INR90.49 crore during FY16-FY18 owing to
fluctuating realizations and changing demand & supply sentiments of
the market, coupled with the company's shifting focus between yarns
& fabrics. Given this, the tangible net-worth base also stood
modest at INR15.20 crore as on March 31, 2020, thereby limiting the
financial flexibility of the company to that extent.
* Low & fluctuating profit margins susceptible to volatile raw
material prices: The PBILDT margin of KIPL stood low in the range
of 2.46-3.60% over FY16-FY18, owing to high level of competition.
Moreover, the same has been fluctuating over the same period owing
to fluctuating cotton prices coupled with changing mix of
processing, outsourcing and trading activities.
* Moderately leveraged capital structure and relatively weak debt
coverage indicators: The capital structure of KIPL stood moderately
leveraged with an overall gearing ranging from 1.06 times to 2
times over the past three balance sheet dates ended March 31, 2018,
given the relatively higher reliance on debt with low
capitalization. Given this, coupled with low profitability, the
debt coverage indicators stood relatively weak.
* Working capital intensive nature of operations: The operations
of KIPL are working capital intensive in nature with majority of
funds blocked in debtors. The inventory holding stood low in the
range of 10-20 days over FY16-FY18 owing to low inventory level
required to be maintained by the company, since the suppliers are
located in proximity to the manufacturing facilities of the
company, thereby enabling prompt availability of the raw materials.
The collection period stood high in the range of 80-200 days over
the same period, since the company is required to extend a credit
period of over 90 days to its customers, which is also prevalent to
the textiles industry, resulting in elongated operating cycle and
subsequent high utilization of working capital limits.
* Customer & supplier concentration & foreign exchange
fluctuation risk: KIPL is exposed to significant customer
concentration risk with the top 5 customers comprising 91.48% in
FY18 (vis-à-vis 59.74% in FY17). Moreover, the supplier profile of
the company is also concentrated with the top 5 suppliers
comprising 100% of the total purchases in FY18 (vis-à-vis 54.79%
in FY17). KIPL is also exposed to significant foreign exchange
fluctuation risk, given the high contribution of exports to the net
sales, which stood in the range of 85-95% over FY15-FY18 (A).
However, comfort can be derived from the fact that the company
enjoys a forward contract LER limit worth INR2 crore from the bank,
thereby serving as a hedge to the said foreign exchange exposure to
the extent.
* Presence in competitive & fragmented industry: KIPL operates in
a highly competitive & fragmented textile industry wherein there
are a number of small & large organized & unorganized players
engaged in various activities across the textile value chain.
Moreover, in the cotton yarns manufacturing activities, there are a
number of players involved, thereby intensifying the competition.
On the other hand, the cotton yarns manufacturing is a highly
seasonal activity given the seasonal nature of cotton. However, the
industry derives various benefits from the government in form of
TUFS, duty drawback, mega cluster approach scheme, and various
subsidies.
Key Rating Strengths
* Long track record of operations in cotton yarns & fabrics
manufacturing & trading activities: KIPL possesses a long track
record of more than three decades of operations in cotton yarn
manufacturing activities which enables the company to establish
strong marketing connects and maintain healthy relations with
customers and suppliers.
* Highly experienced promoters in cotton yarns & fabrics
manufacturing & trading activities: The overall operations of KIPL
are looked after by the promoters - Mr. Ramnik Kikani with his son
Mr. Manoj Kikani, and brother's son Mr. Yogesh Kikani, who possess
an average experience of over 36 years in the business of cotton
yarns & fabrics manufacturing & trading activities.
* Locational advantage pertaining to plant location in textile
hub – Coimbatore: The manufacturing facility of KIPL is located
at Kondampatti village in Kinathukavadu district of Coimbatore
being the textile hub of the nation, wherein the raw materials and
labour are easily available given their proximity to various
textile manufacturing facilities of various companies across the
city. Moreover, most of the suppliers of KIPL are located within
100 km of the manufacturing facility, thereby enabling smooth flow
of supply of the raw materials in minimal transit time, thereby
requiring the company to hold a low level of inventory.
Established as a proprietorship entity in 1980 by Mr. Kishandas
Kikani under the name Kishandas Kikani (KK) was later converted
into a partnership firm and renamed as Kikani Exports (KE) in 1990;
which was later converted into a private limited company and
renamed as Kikani International Private Limited (KIPL) in 2013.
KIPL is engaged in processing of cotton yarns and fabrics. The
products manufactured by the company are sold to various fabric &
Readymade Garment (RMG) manufacturers in India and overseas
[exports comprised 95.23% of the net sales in FY18 as against
INR89.56% in FY17] to various countries across Asia, North America,
South America and Europe. On the other hand, the raw material viz.
cotton yarns and semi-finished fabrics are procured locally from
various cotton millers, which are later processed into twisted
yarns.
LEXUS MOTORS: ICRA Reaffirms B Rating on INR37cr Cash Loan
----------------------------------------------------------
ICRA has reaffirmed ratings on certain bank facilities of Lexus
Motors Limited (LML), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based–
Cash Credit 30.00 [ICRA]B (Stable); Reaffirmed
Fund-based–
Cash Credit
(eDFS) 37.00 [ICRA]B (Stable); Reaffirmed
Non-Fund based–
Bank Guarantee 0.50 [ICRA]A4; Reaffirmed
Untied Limits 32.50 [ICRA]B (Stable)/[ICRA]A4;
Reaffirmed
Rationale
The reaffirmation of the ratings considers the cyclicality and the
inherently low margins in the automobile dealership business due to
industry dynamics and the commission structure decided by the
principal. The ratings continue to remain impacted by the weak
financial profile of LML, characterised by a leveraged capital
structure and depressed level of coverage indicators. The ratings
are also constrained by a significant decline in the scale of
operations in FY2020, which is expected to continue in the current
fiscal as well. The ratings are also impacted by the project
offtake risk, given the ongoing slowdown in the commercial
real-estate segment in Kolkata.
The ratings, however, favorably consider the promoters' experience
in the automobile dealership business, with a track record of over
two decades and the established market position of LML in Kolkata
as an authorised dealer of Tata Motors Limited (TML) for both
commercial vehicles (CV) and passenger vehicles (PV) segments, and
as the sole dealer of Jaguar Land Rover (JLR) in eastern India.
The Stable outlook on the [ICRA]B rating reflects ICRA's opinion
that LML will continue to benefit from its established market
position in the automobile dealership business.
Key rating drivers and their description
Credit strengths
* Experience of the promoters: The promoters have experience of
over two decades in the automobile dealership business. The
promoters' track record in the business mitigates the operational
risk to an extent.
* Established position as an authorised dealer of TML in Kolkata:
The company is among the leading dealers of TML in eastern India,
and has a diversified presence, dealing in the entire range of
commercial/ passenger vehicles along with JLR vehicles. LML is also
the sole dealer for the JLR segment in eastern India. In addition,
the company has 12 showrooms (five PVs and seven CVs), six
workshops (three PVs and three CVs) and three customer service
points for CVs spread across Kolkata. TML has also authorised LML
to supply vehicles to the government organisations in the eastern
region.
Credit challenges
* Significant decline in scale of operations: The operating
income of LML witnessed a fall (YoY) of around 30% in FY2020 due to
a decline in sales volume of both CVs and PVs in view of a downturn
in the automobile sector. Moreover, the operation of the company
was severely impacted due to the unprecedented nationwide lockdown
following the Covid19 pandemic. The top line of the company is
likely to register a further decline in FY2021 compared to the
previous fiscal.
* Weak financial risk profile characterised by high gearing and
depressed coverage indicators: The capital structure of the company
continues to remain leveraged. ICRA notes that due to a change in
emission norms, the inventory position reduced as on March 31,
2020, leading to reduced working capital borrowings, which resulted
in a decline in the overall debt level. This resulted in an
improvement in the gearing to 4.40 times as on March 31, 2020 from
10.85 times as on March 31, 2019, however, the same continued to
remain high. High debt levels and low profitability kept the
coverage indicators depressed, as reflected by an interest coverage
of 1.14 times, NCA/total debt of 2% and TD/OPBDITA of 5.19 in
FY2020. ICRA notes that the company has raised INR10 crore in the
form of Compulsory Convertible Debentures (CCD) in March 2020,
bearing a coupon of 11%.
* Muted demand for the showroom-cum-real-estate project at
Rajarhat: Ongoing slowdown in the commercial realestate market in
Kolkata exposes the company's project at Rajarhat to the off-take
risk. ICRA further notes that LML has significant debt repayment
obligations, which are likely to keep its cash flows under pressure
in the near to the medium term.
* Inherently low margins due to industry dynamics and commission
structure regulated by the principal: The operating profit margin
of auto dealers, including LML, is inherently low due to the
high-volume, low-margin business nature of the industry and intense
competition among dealers. Besides, auto dealers are regulated by
the OEM to a large extent and the commission structure is decided
by the principal, which also restricts the margin.
* Exposed to cyclicality of the industry: The company remains
exposed to the inherent cyclicality of the Indian passenger as well
as commercial vehicle industry.
Liquidity position: Poor
ICRA notes that LML's cash flow position will continue to remain
under pressure due to high working capital requirement and sizeable
long-term debt repayment obligations in the near to the medium
term. Internal cash accruals from the business may not be enough
for meeting the debt servicing obligations, and the company will
have to depend on external sources. Accordingly, the company's
liquidity position is expected to remain poor.
Rating sensitivities
Positive triggers - ICRA may upgrade LML's ratings if the company
is able to sell a substantial portion of its real estate project
and is able to demonstrate a growth in revenue and profitability
while improving its liquidity profile on a sustained basis.
Negative triggers - Pressure on LML's ratings could arise if the
company reports lower-than-expected turnover and profitability.
Incorporated in 1991, Lexus Motors Limited (LML) is involved in the
business of automobile dealership and is an authorised dealer of
Tata Motors Limited (TML). LML started its operations with light
commercial vehicle and was subsequently given the franchise of
multi-utility vehicles, medium and heavy commercial vehicles and
passenger cars of TML. Since FY2011, LML also started dealing in
the models of Jaguar Land Rover (JLR) in arrangement with TML. LML
is the sole dealer for the JLR segment in eastern India. The
company is in the process of developing a showroom-cum-realestate
project in Auto Hub, Rajarhat, Kolkata.
MAPUSA URBAN: Depositors See Serious lapses in liquidation process
------------------------------------------------------------------
The Times of India reports that there are serious irregularities
and procedural lapses in the liquidation process for the Mapusa
Urban Cooperative, some of the bank's depositors alleged on
Jan. 9. The depositors said that they plan to approach the high
court of Bombay at Goa to ensure that their funds are released, the
report says.
TOI relates that the depositors said they believe that the state
government and the management of the defunct bank are working hand
in hand to deny depositors their hard earned funds.
"Till date the balance sheet for the financial year of April 2019-
March 2020 is not yet ready, reducing the liquidation proceedings
to a mockery," alleged Joseph Carneiro, one of the depositors who
has taken the lead in approaching the authorities, TOI relays.
Around 2 lakh depositors with total deposits amounting to INR355
crore are waiting for their funds ever since the Reserve Bank of
India cancelled the bank's licence on April 16, the report notes.
"We have no choice, but to knock on the doors of the high court,"
TOI quotes Mr. Carneiro as saying.
According to TOI, the depositors also expressed dismay to see that
MUCB general manager Shailendra Sawant has been appointed as the
officer in charge of the day-to-day liquidation proceedings.
TOI relates that the depositors alleged that Sawant, along with the
board of directors, were responsible for the bank going under and
for disbursing loans without following due diligence. The
depositors said that they had filed a complaint with the Panaji
police station and the economic offences wing, but the same has not
registered.
"We feel that there is pressure from the top. The government is
collaboration with the board of directors," alleged Kunda Quenim, a
senior citizen and a depositor whose funds are locked with the
bank.
The depositors, many of them senior citizens, said that despite
having adequate funds in their bank accounts, they struggle to meet
their daily expenses, medical expenses, marriage costs and other
financial needs, adds TOI.
MVK GLOBAL ENTERPRISES: Insolvency Resolution Process Case Summary
------------------------------------------------------------------
Debtor: MVK Global Enterprises Private Limited
S.No. 647/3B
Near D.No. 23/1485
Plot No. 21
Opp. SRK School
Magunta Layout
Nellore Bit-1
Nellore 524003
Insolvency Commencement Date: December 11, 2020
Court: National Company Law Tribunal, Amaravathi Bench
Estimated date of closure of
insolvency resolution process: June 10, 2021
(180 days from commencement)
Insolvency professional: Mr. Mannava Divakara Sarma
Interim Resolution
Professional: Mr. Mannava Divakara Sarma
D.No. 5-4-11, 2/3 Brodipet
Guntur 522002
Guntur Dt. Andhra Pradesh
E-mail: mdsarma2003@yahoo.com
mvk.cirp@gmail.com
Last date for
submission of claims: January 1, 2021
OM POWER: CRISIL Keeps B on INR1cr Credit in Not Cooperating
------------------------------------------------------------
CRISIL said the ratings on bank facilities of Om Power Transmission
Private Limited (OPTPL) continue to be 'CRISIL B/Stable/CRISIL A4
Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 6.55 CRISIL A4 (Issuer Not
Cooperating)
Cash Credit 1.00 CRISIL B/Stable (Issuer Not
Cooperating)
CRISIL has been consistently following up with OPTPL for obtaining
information through letters and emails dated June 29, 2020 and
December 18, 2020 among others, apart from telephonic
communication. However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
failed to receive any information on either the financial
performance or strategic intent of OPTPL, which restricts CRISIL's
ability to take a forward looking view on the entity's credit
quality. CRISIL believes that rating action on OPTPL is consistent
with 'Assessing Information Adequacy Risk'. Based on the last
available information, the ratings on bank facilities of OPTPL
continues to be 'CRISIL B/Stable/CRISIL A4 Issuer not
cooperating'.
OPTPL, formerly known as OM Enterprise is Ahmedabad based
Electrical Contracting Company which was formerly into marketing of
LT electrical products & contracting of lighting & maintenance
work. Over the years, it has emerged as EPC and Operations &
Maintenance Contracting Company in the area of Transmission lines &
Sub stations up to 400 KV including Industrial Power Distribution.
PARAMOUNT COSMETICS: CARE Assigns B Rating to INR17.12cr Loan
-------------------------------------------------------------
CARE Ratings has assigned rating to the bank facilities of
Paramount Cosmetics (India) Limited, as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank
Facilities 17.12 CARE B; Stable Assigned
Short Term Bank
Facilities 0.88 CARE A4 Assigned
Detailed Rationale & Key Rating Drivers
The rating assigned to the bank facilities of Paramount Cosmetics
(India) Limited is tempered by modest scale of operations, low cash
accruals against debt servicing obligations, thin profitability
margin, stretched working capital cycle and intense competition
from large number of unorganised players. However, the rating
derives strength from the long vintage of over 3 decades of the
company and established brand presence under 'Shilpa' brand name in
the cosmetics industry. Furthermore, the rating derive strength
from its experienced promoters being pioneers in Bindi segment and
has gained market repute and brand acceptance in the Bindi
segment.
Rating Sensitivities
Positive Factors (Factors that could lead to positive rating
action/upgrade)
* Ability of the company to achieve TOI of INR30.00 crore and
reduce the inventory holding to less than 240 days
* Achieve DSCR above unity
Negative Factors (Factors that could lead to negative rating
action/downgrade)
* Increase in inventory holding beyond 400 day and PBIILDT less
than 16%.
Detailed description of the key rating drivers
Key Rating Weaknesses
* Small scale of operations: The TOI of the company has been
impacted post GST implementation due to the conscious decision
taken by the management to cater only to GST compliant segment.
Though the scale of operations have been improving over the years,
the scale of operations is yet to reach pre GST levels. Further,
due to impact of Covid pandemic, the sales during lockdown is lost
and the company has achieved INR9.82 crore till 8MFY21.
* Moderate debt coverage metrics: Though the company is operating
at good PBIDT margin of 16.27%, PAT margins are negative due to
higher interest expense and depreciation. Total Debt/GCA is high at
16.77x as on March 31, 2020. The company has large debt comprising
of INR11 Cr CC which doesn't commensurate with TOI. The company has
requested the bank to carve out INR6 Crore from CC into WCTL which
is under consideration as per banker interaction, the DCSR is below
unity and shortfall in debt servicing has been supported through
unsecured loans from related parties.
* Stretched operating cycle: The operating cycle is stretched to
415 days attributed to high finish goods inventory holding of 395
days. The company has the practice of holding the finish goods
inventory at higher levels because the major product Bindi has to
be made available to end users at the stores at all point of times.
The end users will easily switch over to other brands if the
product is not available. The company makes payment in 50- 60 days
to its creditors and collection period is around 65-70 days.
* Highly fragmented industry with intense competition from large
number of players: PCIL faces stiff competition in the business
from large number of unorganised players in the market with
duplicity of products. High level of competition calls for higher
advertisement and sales promotion expenditure. Further, traditional
cosmetics market remains highly fragmented with widespread use of
unbranded and homemade products in rural market
wherein small and medium manufacturers also a competition to
established player.
Key Rating Strengths
* Experienced management and long track record of operations:
PCIL was incorporated in 1985 and managed by Mr. Hiitesh
Topiiwaalla who has a rich experience of over three decades in the
cosmetics industry and is currently holding the position of
chairman. All the directors of the company have experience of more
than two decades in the similar line of business. PCIL has a long
track record of more than three decades in the beauty and personal
care industry which has helped in establishing a strong marketing
network with a proven track record and an established brand name.
The promoters are in the same line of business for over 3 decades.
The company claims to be the market leader and the only organised
player in Bindi segment which is largely dominated by unorganised
players.
* Established Brand presence: The flagship bindi brand 'Shilpa'
is a house hold name in bindi segment and has been in the market
for over 2 decades. The products of the company under the Brand
name “Shilpa" are enjoying good brand equity and market repute in
the Indian traditional cosmetic range of products and are well
accepted by the market and customers. The company is also dealing
in other brands namely Instinct, Kromme, Sunspot.
Liquidity: Stretched
Stretched liquidity marked by tightly matched accruals to repayment
obligations, 92% utilised bank limits during last 12 months and
modest cash balance of INR0.63 crore as on September 30, 2020.
Further, the company had availed moratorium on its debt obligations
for the period March 1, 2020 to August 31, 2020. However, the
current ratio stood above unity at 1.07 as on March 31, 2020.
Moratorium: The Company has availed moratorium on its bank
facilities from March 2020 to August 2020.
Paramount Cosmetics (India) Limited, the flagship company of
Paramount group was incorporated in 1985 by Mr B D Topiwala. PCIL
with existence of over more than 3 decades, has diversified itself
from being a single product to a multiproduct and multi brand
company. The company is engaged in manufacturing of beauty and
personal care products like bindi, kumkum, kajal and deodrants etc.
The company is well known for its flagship brand Shilpa bindis
along with various other brands Sunspot (Sticker bindi's and Liquid
kumkum), Kromme (Instant eye shadow applicator) and Instinct (men's
Deodorants) among others.
PRECON TECHNOLOGY: ICRA Lowers Rating on INR8cr Loan to D
---------------------------------------------------------
ICRA has revised the ratings on certain bank facilities of Precon
Technology and Castings Ltd, as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based 8.00 [ICRA]D; ISSUER NOT COOPERATING
Limits Rating downgraded from
[ICRA]B+(Stable) ISSUER NOT
COOPERATING and continues to
remain under 'Issuer Not
Cooperating' category
Non-Fund 2.50 [ICRA]D; ISSUER NOT COOPERATING
Based Limits Rating downgraded from [ICRA]A4
ISSUER NOT COOPERATING and
continues to remain under
'Issuer Not Cooperating' category
Rationale
The rating downgrade reflects delays in debt servicing. The rating
is based on limited information on the entity's performance since
the time it was last rated in December 2020. The lenders, investors
and other market participants are thus advised to exercise
appropriate caution while using this rating as the rating may not
adequately reflect the credit risk profile of the entity, despite
the downgrade.
As part of its process and in accordance with its rating agreement
with Precon Technology And Castings Ltd, ICRA has been trying to
seek information from the entity so as to monitor its performance,
but despite repeated requests by ICRA, the entity's management has
remained non-cooperative. In the absence of requisite information
and in line with SEBI's Circular No. SEBI/HO/MIRSD4/CIR/2016/119,
dated November 1, 2016, ICRA's Rating Committee has taken a rating
view based on the best available information.
Key rating drivers and their description
Credit strengths: NA
Credit challenges
* Delays in debt servicing: There have been delays in debt
servicing as mentioned the account became irregular and has been
classified as 'Non-Performing Assets or NPA'
Liquidity position: NA
Precon Technology and Castings Ltd manufactures steel and alloy
steel castings. The company commenced commercial operations in May
2013 and has a manufacturing unit in Bhiwadi (Rajasthan), with an
installed capacity of 3,600 tonnes per annum (TPA). The plant is
capable of producing castings, with individual weight of 50 Kgs to
2500 Kgs. At present, the plant supplies castings mainly for OEMs
of heavy construction equipment, earth moving equipment, mining
equipment, power equipment etc.
PRIDE HOTELS: ICRA Lowers Rating on INR134.53cr Term Loan to D
--------------------------------------------------------------
ICRA has revised the ratings on certain bank facilities of Pride
Hotels Limited (PHL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Term Loans 134.53 [ICRA]D; downgraded from
[ICRA]BBB (Negative)
Long-term Fund- 16.00 [ICRA]D; downgraded from
based Limits [ICRA]BBB (Negative)
Short-term Non- 1.00 [ICRA]D; downgraded from
fund Based Limits [ICRA]A3+
Rationale
The rating action follows delays in debt servicing by the company,
owing to its weakened liquidity position following the pandemic
outbreak. With sizeable debt servicing requirements, the sharp
contraction in revenues, due to the covid-19 pandemic had a
detrimental impact on the company's ability to service its debt.
The company had opted for moratorium until August 31, 2020, under
the RBI's Covid-19 Regulatory Package. Subsequently, the company
applied for one-time restructuring plan (RP) of all its loans prior
to the next repayment date. Post the moratorium expiry, the company
had missed its re-payments in view of its stressed cash flows and
in anticipation of a favorable restructuring of loans. For the
period during which the company's restructuring application was
being reviewed by the lenders, ICRA had not recognized the missed
payments as default in accordance with its published approach. The
RP application had not been invoked by PHL's lender on or before
December 31, 2020, as per the guidelines issued by the Reserve Bank
of India (RBI) on August 6, 2020. Since the account continues to
remain irregular post December 31, 2020, ICRA has recognised
default. As on January 8, 2021, the company had overdues of ~INR2
crore in its account. The company had opted for the Emergency
Credit Line Guarantee Scheme (ECLGS) 2.0 under which it has been
sanctioned INR29.1 crore. This will provide much needed liquidity.
Key rating drivers and their description
Credit strengths
* Management's established track record of operations in
hospitality industry: PHL's promoters have extensive experience in
the hospitality industry with a demonstrated track record.
Diversified geographic and price point presence - PHL operates
seven own hotel properties (in Pune, Nagpur, Ahmedabad, Kolkata,
Bengaluru, Chennai and New Delhi) and thirteen hotels/ resorts on a
management contract basis (in Agra, Jaipur, Dharamshala, Vadodara,
Puri, Goa, Indore, Manali, Rajkot, Gangtok, Bharatpur, Anand and
Jabalpur). The wide geographical reach across 20 cities in India
(covering metro, tier I and tier II cities) has facilitated PHL in
establishing a corporate customer base. Further, it has a
diversified presence across upscale, mid-market, economy and resort
segments.
* F&B and MICE businesses offer diversified revenue streams: The
company's properties include large banquet halls and conference
rooms, along with a number of restaurants and bars. The food and
beverage (F&B) business and the meetings, incentives, conferences
and exhibitions (MICE) business provide a healthy diversification
for the company's overall revenue growth. The F&B segment accounted
for ~62% of the room revenues in FY2020.
Credit challenges
* Stretched financial risk profile resulting in delays in debt
servicing: Sharp contraction in accruals, due to the impact of the
pandemic, has impacted the liquidity position severely. Further,
weak coverage indicators and delays in receivables collection has
also stretched cashflows. The company has receivables overdue from
the government amounting to ~INR3.89 crore as on January 8, 2021,
for services rendered in Bengaluru, Chennai and Ahmedabad where the
company housed medics during the quarantine period. Consequently,
the company has delays in servicing its debt obligations.
* Cyclical industry vulnerable to general economic slowdown and
exogenous factors: Due to its presence in the hospitality industry,
the company is susceptible to risks arising from the cyclicality
therein. Hotel revenues are also vulnerable to general economic
slowdown and exogenous shocks (such as geopolitical crisis,
terrorist attacks, disease outbreaks, natural calamities etc). Due
to the ongoing outbreak of Covid-19, the operational metrics of the
company have been severely impacted.
* Moderate scale of operations: As of November 2020, with a room
inventory of 1,955 (1,129 rooms in owned/leased properties and 826
rooms under management contracts), the scale of operations is
moderate. The company's occupancy levels which stood at ~67% in
FY2020 declined to ~20% and ~42% in Q1 FY2021 and Q2 FY2021
respectively. ARR and RevPAR stood at INR4,381 and INR2,939
respectively in FY2020, constrained by competition. Lower
occupancies in FY2021, led to deterioration in ARR and RevPAR to
INR2,266 and INR955 in the 3-month period ending in November 2020.
Liquidity position: Poor
The company's cashflow from operations was severely impacted during
H1 FY2021 with the standalone entity reporting an operating loss of
INR3.2 crore due to the prevailing pandemic. While there has been a
sequential improvement since, the industry and company are likely
to witness a prolonged recovery. PHL had term loan outstanding of
INR134.5 crore as on March 31, 2020 with principal repayments post
the completion of moratorium in August 2020 (repayments of INR12.8
crore in H2 FY2021). Further the company has repayments of INR21.8
crore and INR21.8 crore for FY2022 and FY2023 respectively.
Besides, the company has receivables overdue from the government
amounting to ~INR3.89 crore as on January 08, 2021.The timely
collections from these debtors would also support liquidity
requirements of the company in the immediate term. Also, despite
accruals expected to remain weak over several quarters going
forward, the sanctioning of ECLGS loans of INR29.1 crore would
provide additional liquidity to the stressed cash flow of the
company. Turnaround in operations will be critical for improving
the liquidity position of the company.
Rating sensitivities
Positive triggers - ICRA could upgrade the ratings with
regularisation of debt servicing obligations on a sustained basis.
Negative triggers - Not Applicable
PHL, incorporated in February 1983 as Pride Hotels Private Limited,
was subsequently converted to a public limited company in December
2005. PHL manages seven owned/leased hotels - namely, The Pride
Hotel, Pune, The Pride Plaza Hotel, Ahmedabad, The Pride Hotel,
Nagpur, The Pride Hotel, Chennai, The Pride Hotel, Bengaluru, The
Pride Hotel, Kolkata and The Pride Plaza Hotel, New. PHL has
classified its hotels under the brands of Pride Plaza (four hotels)
in the upscale segment and Pride (three hotels) in the mid-scale
segment. Most of the hotels have banquet halls, conference rooms,
restaurants and bars.
To facilitate faster expansion of its brand across the country, PHL
enters into management contracts with asset owners. At present, it
has a portfolio of thirteen properties under the brands Pride
Biznotel (economy business hotel) and Pride Resorts.
As per the provisional financials for H1 FY2021 (Standalone), PHL
reported an operating loss of INR3.2 crore on an operating income
(OI) of INR90.9 crore.
R.S. FOODS: CARE Lowers Rating on INR8cr LT Loan to B-
------------------------------------------------------
CARE Ratings revised the ratings on certain bank facilities of R.S.
Foods (RSF), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 8.00 CARE B-; Stable; ISSUER NOT
Facilities COOPERATING; Rating continues
to remain under ISSUER NOT
COOPERATING category and
Revised from CARE B; Stable
Detailed Rationale & Key Rating Drivers
CARE had, vide its press release dated October 23, 2019 placed the
rating of RSF under the 'issuer noncooperating' category as R.S.
Foods had failed to provide information for monitoring of the
rating. RSF continues to be non-cooperative despite repeated
requests for submission of information through e-mails, phone calls
and a letter/email dated December 21, 2020, December 18, 2020,
December 17, 2020 and December 16, 2020. In line with the extant
SEBI guidelines, CARE has reviewed the rating on the basis of the
best available information which however, in CARE's opinion is not
sufficient to arrive at a fair rating.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above ratings.
Detailed description of the key rating drivers
The rating has been revised on account of susceptibility to
fluctuation in raw material prices and monsoon dependent operations
and partnership nature of constitution. The rating, however,
derives strength from experienced partners and location advantage.
Key Rating Weaknesses
* Susceptibility to fluctuation in raw material prices and
monsoon dependent operations: Agro-based industry is characterized
by its seasonality, due to its dependence on raw materials whose
availability is affected directly by the vagaries of nature.
Adverse climatic conditions can affect their availability and leads
to volatility in raw material prices. Any sudden spurt in the raw
material prices may not be passed on to customers completely owing
to firm's presence in highly competitive industry.
* Partnership nature of constitution: RSF's constitution as a
partnership firm has the inherent risk of possibility of withdrawal
of the partners' capital at the time of personal contingency and
firm being dissolved upon the death/retirement/insolvency of
partners.
* Fragmented nature of industry coupled with high level of
government regulation: The commodity nature of the product makes
the industry highly fragmented with numerous players operating in
the unorganized sector with very less product differentiation.
Furthermore, the raw material (paddy) prices are regulated by
government to safeguard the interest of farmers, which in turn
limits the bargaining power of the rice millers.
Key Rating Strengths
* Experienced partners: RSF is currently being managed by Mr. Ram
Lal Singla and Mr. Atul Singla. Mr. Ram Lal Singla has a work
experience of around three decades in the rice industry as a
partner in Anand Rice Mills and in the textile industry as a
partner in Gupta Cloth House. Mr. Atul Singla has a work experience
of two years through his association with RSF only.
* Location advantage: RSF's manufacturing unit is located in
Karnal, Haryana which is one of the hubs for paddy/rice, leading to
its easy availability which is the key raw material for the
processing of rice. The unit is also in proximity to the grain
market resulting in procurement at competitive rates.
R.S. Foods (RSF) was established in April, 2015 as a proprietorship
firm by Mr. Satish Kumar. The constitution was converted into a
partnership firm in April 2016 and is currently being managed by
Mr. Ram Lal Singla and Mr. Atul Singla as its partners sharing
profit and losses equally. The firm is engaged in processing of
paddy and trading of rice at its manufacturing facility in Karnal,
Haryana with an installed capacity of processing 2880 tonnes of
paddy per annum.
REAL VIDEO: Insolvency Resolution Process Case Summary
------------------------------------------------------
Debtor: Real Video Impact Private Limited
Registered office:
No. H-78, 7th Floor
Himalaya House
Kasturba Gandhi Marg
Connaught Place
New Delhi 110001
Corporate office:
10th Floor, Vankarath Tower
NH Bye-pass, Kochi 24
Insolvency Commencement Date: January 6, 2021
Court: National Company Law Tribunal, Cochin Bench
Estimated date of closure of
insolvency resolution process: July 5, 2021
Insolvency professional: Mr. Raju Palanilkunnathil Kesavan
Interim Resolution
Professional: Mr. Raju Palanilkunnathil Kesavan
CGNRA-9(33/1183A), Kodamassery Lane
Chalikkavattom, Vennala P.O.
Kochi 682028
E-mail: rajupkin@gmail.com
- and -
M/s Agasti & Associates
Chartered Accountants
First Floor, CNRWA-6
Cherupushpam Lane
Kadavanthra
Kochi 682020
Last date for
submission of claims: January 22, 2021
SIYARAM METAL: ICRA Keeps B- Rating on INR35cr Cash Loan
--------------------------------------------------------
ICRA said the rating for the INR35.00 crore bank facilities of
Siyaram Metal Udyog Private Limited continue to remain under the
'Issuer Not Cooperating' category. The rating is denoted as
[ICRA]B-(Stable) ISSUER NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund based- 35.00 [ICRA]B- (Stable) ISSUER NOT
Cash Credit COOPERATING; Rating Continues
to remain under 'Issuer Not
Cooperating' category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA, the
entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis best available/dated/
limited information on the issuers' performance. Accordingly, the
lenders, investors and other market participants are advised to
exercise appropriate caution while using this rating as the rating
may not adequately reflect the credit risk profile of the entity.
The rating action has been taken in accordance with ICRA's policy
in respect of non-cooperation by a rated entity available at
www.icra.in.
Siyaram Metal Udyog Private Limited (SMUPL) is a metal merchant
based in Jamnagar, Gujarat and has been in operations for the last
two decades. The company primarily trades non-ferrous metallic
scrap in and around Jamnagar.
SMUPL imports non-ferrous scrap. The product profile includes brass
scrap, ingots and other copper alloys, as well as zinc.
SKS POWER: ICRA Lowers Rating on INR1,600cr Term Loan to D
----------------------------------------------------------
ICRA has revised the ratings on certain bank facilities of SKS
Power Generation, Chhattisgarh, Limited (SKS), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based 1,600.0 [ICRA]D, downgraded from
Term Loan [ICRA]C+; removed from
rating watch with developing
implications
Fund-based 330.0 [ICRA]D, downgraded from
Cash Credit [ICRA]C+; removed from
rating watch with developing
implications
Non-fund based 535.0 [ICRA]D, downgraded from
[ICRA]C+; removed from
rating watch with developing
implications
Rationale
The rating revision and removal of rating watch factors the recent
delays in debt servicing by SKS as its cash flows were impeded
after lower offtake of power by the power purchase agreement (PPA)
counterparties and the term lender did not invoke the company's
restructuring proposal/resolution plan (RP) within the regulatory
timeline of December 31,2020.
SKS availed the moratorium from March 1 to August 31,2020 from its
two lenders (a term lender and a working capital lender), as per
the COVID-19 Regulatory Package announced by the Reserve Bank of
India (RBI). Subsequently, it requested the term lender for loan
restructuring in September 2020, citing the continuous stress on
its cash flows. While the company missed its repayment obligations
on the term loans in September 2020, ICRA did not recognise the
missed payment as default as the request to the lender for loan
restructuring was made prior to the scheduled repayment due date.
ICRA's action was in accordance with the rating approach published
on its website.
The rating also factors the weak financial risk profile of SKS's
promoter, Agritrade Resources Limited (ARL), which is facing
provisional liquidation proceedings in Bermuda. The rating
continues to be constrained by the lack of long-term PPAs for
almost 500 MW capacity and the counterparty credit risk associated
with the remaining capacity as the ultimate offtakers are
state-owned distribution utilities with weak financial profiles.
The company's ability to renew existing PPAs or enter fresh
medium-term PPAs on expiry of the current PPAs in a timely manner
and at cost reflective tariff remains a key monitorable. Further,
the company is yet to tie up the PPA for the remaining 100-MW
capacity, and the timeliness of the same remains critical from the
credit perspective. The rating also considers the ongoing legal
proceedings and the regulatory uncertainty over the long-term PPA
signed with Rajasthan discoms, wherein the discoms have not yet
adopted the tariff citing that it is higher than the market rate.
The rating also factors the exposure to interest rate risk as well
as the cash flow sensitivity to variation in short-term power
tariff levels and off-take over the debt tenure, given the
significant share of untied capacity.
Key rating drivers:
Credit challenges
* Delays in debt servicing; resolution plan not invoked by
lender; parent facing liquidation proceedings: The company's
revenues and cash flows have been adversely impacted in the current
fiscal by the lower power offtake from the key counterparties
because of the reduced demand following the implementation of
lockdown measures by the Government to contain the spread of
Covid-19. The company availed both the moratorium periods from its
two lenders (a term lender and a working capital lender), as per
the COVID-19 Regulatory Package announced by the Reserve Bank of
India (RBI). However, post the completion of the moratorium period
on August 31, 2020, the company failed to fully service its
scheduled repayment obligations on term loans for September 2020.
ICRA notes that the company had requested its term lender for loan
restructuring in September 2020, prior to the scheduled repayment
due date (which was missed), citing stress on its cash flows.
However, the lender did not invoke the restructuring
proposal/resolution plan within the regulatory timeline of December
31, 2020. Meanwhile, the company continued to delay its debt
servicing obligations for November and December 2020. ICRA further
notes that the parent, ARL, which has provided corporate guarantee
to the borrowings of SKS, is also under financial distress and is
facing provisional liquidation proceedings. Hence, the likelihood
of receiving any funding support from the parent remains low.
* Regulatory issue pertaining to implementation of long-term PPA
for 100 MW capacity with Rajasthan utilities: The company entered a
long-term PPA of 25 years with Rajasthan discoms for the 100 MW
capacity on February 4,2019. However, citing high tariff rate (Rs
5.30/unit) as the reason, RVPN (on discoms' behalf) has not adopted
the tariff rate yet. After the company approached Supreme Court
(SC), the issue was referred to APTEL which in its order dated
February 3,2020 directed RVPN to adopt the tariff offered by SKS
Power in its bid and directed that the PPA dated February 4,2019
between both the parties be revived. RVPN challenged this order in
the Supreme Court. The Honourable Supreme Court, in its order dated
September 28, 2020, has mentioned that the PPA between both the
parties should be revived and power supply should start at the
interim tariff of INR2.88/unit till the final outcome of the
appeal. While this offers some relief, the subsequent commencement
of power offtake at the interim tariff by Rajasthan discoms remains
to be seen.
* ~67% of total capacity relies on medium-term PPAs; PPA for
remaining 100 MW capacity yet to be signed: The company has entered
medium-term PPAs with Noida Power Company Limited (NPCL) and PTC
India Ltd (PTC) for a capacity totaling to 400 MW. The PPAs with
PTC have a tenure of three years and constitute 50% of the total
capacity, with ultimate offtakers as Bihar Discoms and Haryana
discoms. The company has not yet signed a PPA for the remaining 100
MW capacity and the timeliness of the same remains a key
monitorable.
* Counterparty credit risks from indirect exposure to state
discoms: The counterparty credit risk of the company remains high,
given the weak financial position of the state distribution
utilities, their high distribution loss levels, and inadequate
tariffs and subsidy in relation to the supply cost. The company has
predominantly sold power through short-term and medium-term PPAs
(with PTC as aggregator) or through power exchanges so far.
* Exposure to volatility in short-term tariff rates: The
company's cash flows will remain sensitive to variation in
short-term power tariff levels and off-take over the debt tenure,
given the significant share of untied-up capacity. The power
exchange tariffs have remained low in the recent months, given the
slowdown in demand growth and the increase in supply from hydro and
renewable sources.
* Exposure to price risk: The company will remain exposed to
volatility in coal prices and interest rate risk, owing to single
part tariff structure in medium-term PPAs.
Liquidity position: Poor
SKS Power's liquidity position is poor as evident from the delays
in debt servicing. The parent, which has provided corporate
guarantee to the borrowings of SKS Power, is also under financial
stress and is facing provisional liquidation proceedings. Hence,
the likelihood of receiving any funding support from the parent is
low.
Rating Sensitivities:
Positive triggers - Regular debt servicing for minimum three
consecutive months would be a positive rating trigger.
Negative triggers - Not applicable
SKS was originally promoted by SKS Ispat and Power Ltd for
development of a 1200-MW (4 x 300 MW) thermal power project, in two
phases of 600 MW (2 X 300 MW) capacity each, in the Raigarh
district of Chhattisgarh (CG). The company achieved CoD of the two
units under phase I in October 2017 and April 2018. Due to delayed
execution and significant escalation in project cost, the company
was unable to service its debt obligations in a timely manner.
Consequently, in accordance with the RBI circular on resolution of
stressed assets, the lenders opted for a change in management
through an open bidding process. Accordingly, the proposal of ARL,
a company listed on Hong Kong stock exchange, was accepted that
comprised payment of INR2,170 crore towards purchase of shares,
assignment of loan, and top-up of the outstanding BGs with 100%
cash margins. Subsequently, the management control of SKS was
passed to ARL through its step-down wholly owned subsidiary,
Entwickeln India Energy Pvt Ltd (EIPL) on March 18, 2019. EIPL had
financed the acquisition amount of INR2,170 crore through INR1,600
crore of rupee term loan and the rest through equity and compulsory
convertible debentures (CCDs). ARL has provided an unconditional
and irrevocable corporate guarantee to all the borrowings of SKS.
In FY2019, the company reported a net loss of INR2381.6 crore on an
operating income of INR511.2 crore as against a net loss of
INR295.1 crore on an operating income of INR212.5 crore in FY2018.
WIND WORLD: CARE Reaffirms B Rating on INR185.73cr LT Loan
----------------------------------------------------------
CARE Ratings reaffirmed ratings on certain bank facilities of Wind
World Wind Farms (Hindustan) Private Limited (WHPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank
Facilities 185.73 CARE B; Stable Reaffirmed
Detailed Rationale & Key Rating Drivers
The reaffirmation of long-term rating of bank facilities of WHPL
continues to be constrained by high counter party risk, weak
financial risk profile and dependence on seasonal wind pattern.
However, the rating continues to derive strength from firm off-take
arrangement of entire operational capacity which mitigates demand
risk.
Rating Sensitivities
Positive Factors
* Decrease in receivable days below 30 days on sustained manner
and increase in plant load factor above 15% on sustained basis
Negative Factors
* Delay in collection of receivables from counter party more than
120 days.
Detailed description of the key rating drivers
Key Rating Strengths
* Experienced Promoters & long track record of operations: Wind
World Wind Farms Hindustan Private Limited (WWWFHPL) is a Wind
World India Limited (WWIL) group company. As on March 31, 2020,
WWIL holds 51% shares in WWFHL and balance shares are held by
Enercon GmbH (ultimate holding company). Mr. Yogesh Mehra and Mr.
Ajay Mehra are also the founders of WWIL (formerly known as Enercon
India Limited), one of the largest player in the wind power
industry.
* Firm off-take arrangement for entire operational capacity: WHPL
has long term Power Purchase Agreements for entire operational
capacity for period of 20 years (i.e. till FY2026) with DISCOMs in
state of Karnataka and Rajasthan. In Karnataka, PPA is with
Bangalore Electricity Supply Company Limited at tariff of INR3.40
per unit for installed capacity of 68.80 MW located at Tumkur
district. In Rajasthan, PPA is with Jaipur Vidyut Vitran Nigam
Limited [JVVN, rated CARE BBB+(CE); Negative] at tariff of INR3.79
per unit for 28.80 MW and Ajmer Vidyut Vitran Nigam Limited [AVVN,
rated CARE BBB+(CE)/Negative] at tariff of INR3.79 per unit for
31.20 MW installed capacity located at Jaisalmer District.
Industry Outlook
There is great thrust from Govt. for improving the share of
renewable power in India's overall power mix which is reflected
from various policy initiatives. There had been muted wind power
generation capacity additions during FY18, FY19 & FY20 on the back
of migration from Feed-in-Tariff (FiT) based model to reverse
auction based tariff discovery model. However, looking at the
already allotted capacity and govt.'s push for achieving targeted
capacity of 60 GW by end FY22, capacity additions are likely to
improve in next two to three years. Wind power projects benefit
from established technology, improved generation from technological
advancements, faster and modular nature of implementation, stable
long term revenue visibility with long term off take arrangements
at a fixed tariff, minimal O&M requirements, tariffs comparable to
conventional power generation, must run status of wind power
projects and favourable amendments in bidding guidelines for IPPs.
However, there are concerns like increased difficulties in land
acquisition, inadequate grid connectivity on account of poor
evacuation infrastructure, backing down of the projects by few
state Discoms, weak credit profile of WTG manufacturers, regulatory
haze in terms of renegotiation of tariff in concluded PPAs and
cancellation of concluded auctions, weak financial risk profile of
Discoms with significant delays in payment by few state Discoms,
increased difficulties in debt tie-up and inherent risk of
variation in wind patterns. Overall, positive and negative
developments in the sector counterbalance each other, thereby
resulting in a stable outlook.
Going forward key monitorables would be developments in claim of
off-takers for renegotiation of PPAs, payment pattern of
off-takers, financial health of WTG manufacturers and regulatory
stance.
Key rating weaknesses
* High counter party risk resulting in weak financial risk
profile of the company: WHPL continues to expose to high counter
party risk as entire installed capacity is sold to state Discoms
having relatively weak financial risk profile. The company is
witnessing delay in realization of receivables from Rajasthan
Discoms leading to weakening of financial risk profile of the
company. As a result, Debt Service Reserve Account (DSRA) is often
utilized towards repayment of debt obligations and company
replenishes DSRA account as and when it receives payments from
Discoms.
* Dependence on seasonal wind patterns: Wind farms are exposed to
inherent risk of weather fluctuations leading to variations in the
wind patterns and velocity which affects the Plant Load Factor
(PLF). Generally, the wind farms enjoy higher PLF during May –
October (monsoon period) and lower PLFs in the remaining months of
the year. TN as a state has witnessed unprecedented cyclones and
floods in nearby state over past two years which shortened the wind
season in the last 2 years thereby affecting the PLF and the power
generation levels across all wind firms over the last 2 years.
Liquidity: Poor
The company has maintained DSRA of Rs 24.82 crore as on 18th
December, 2020 in the form of Fixed Deposits and cash and cash
equivalents of INR1.39 cr. The company has been facing liquidity
issues on account of delay in receipt of funds from the Rajasthan
DISCOM, resulting in delays in repayments of term loans as well as
the interest payments. However, the company has maintained DSRA in
the form of Fixed Deposits which can be used for the debt
servicing. The DSRA has not been debited on time by the Bank for
adjusting towards debt repayment and hence the debt servicing has
been irregular.
Wind World Wind Farms Hindustan Private Limited (WWWFHPL) is a Wind
World India Limited (WWIL) group company. As on March 31, 2020,
WWIL holds 51% shares in WWFHL and balance shares are held by
Enercon GmbH (ultimate holding company). Mr. Yogesh Mehra and Mr.
Ajay Mehra are also the founders of WWIL (formerly known as Enercon
India Limited), one of the largest player in the wind power
industry. WWIL has expertise in wind power, has 5 plants in Daman
for manufacturing of blades and wind turbine generator with
manufacturing capacity of 1000 WEGs equivalent to 800 MW p.a. and
three concrete tower manufacturing plants in Gujarat, Karnataka and
Tamil Nadu, having annual installed capacity of 1200 towers p.a.
WWIL's wind farms today straddle seven high wind potential states
Karnataka, Maharashtra, Tamil Nadu, Rajasthan, Gujarat, Madhya
Pradesh and Andhra Pradesh, spread across 3,000 kms of India.
[*] INDIA: Liquidation Far Exceeds Companies Rescued Under IBC
--------------------------------------------------------------
Livemint.com reports that unviable companies liquidated under the
Insolvency and Bankruptcy Code (IBC) far outnumbered those rescued
since the new bankruptcy framework came into force four years ago,
indicating the challenges facing the economy.
Official data showed that almost in every quarter since January
2017, the number of businesses that were ordered to be liquidated
was three to four times the companies that could find a fresh lease
of life, the report says.
The highest number of liquidation orders of 155 came in the second
quarter of FY20, against 33 resolution plans cleared by tribunals,
Livemint.com discloses citing data from the Insolvency and
Bankruptcy Board of India (IBBI). In the second quarter of FY21, 68
companies faced liquidation against 22 businesses stitching
together revival plans.
According to Livemint.com, IBC's goal is to salvage the maximum
number of distressed firms, which experts said has helped, but the
number of liquidation orders still remains high.
"The number of companies sent for liquidation could have been even
higher but for the opportunities being given by the National
Company Law Tribunal (NCLT) beyond 330 days to explore revival as
is the ultimate goal of the IBC. The problem is that it will only
result in kicking the can down the lane unless some inherent issues
are addressed. One of the main reasons for more liquidation than
resolution is the disqualification under section 29A of IBC of
promoters, who happen to be the most obvious propounders of a
resolution plan, from taking part in the bid process. In the Indian
context of family-driven businesses, promoters play a crucial role
in steering the company and in their absence, the corporate debtor
is left to fend for itself," Livemint.com quotes Sumant Batra,
managing partner of the law firm Kesar Dass B. and Associates, as
saying.
IBC disqualifies promoters of defaulting companies from placing
bids unless they pay up all overdue amounts. The idea is to check
promoters from winning the company back at a discounted price while
lenders take a haircut, Livemint.com states.
Inadequate number of buyers and the inability of businesses to
remain viable are among reasons for the higher liquidation number,
said Shardul Shroff, executive chairman, Shardul Amarchand
Mangaldas and Co., a law firm, Livemint.com relays. "The pre-pack
scheme currently under discussions will help in reducing the number
of liquidation orders. Also, the government could explore solutions
like setting up a fund to support micro, small and medium
enterprises in the resolution process," Livemint.com quotes Shroff
as saying.
Besides, the absence of a matured distressed asset market, lack of
freedom for resolution professionals to proactively reach out to
potential investors and stitch together a plan, general delays in
attaining bid closure, the overall economic conditions including of
tight liquidity and lenders' overly defensive approach in taking a
haircut are reasons for the high number of businesses going into
liquidation, explained Batra.
India's economy has been on a downward spin since the January-March
period of 2018 when it expanded by 8.2%, Livemint.com notes. As per
official estimates, the economy is projected to contract by a
record 7.7% in FY21 for the first time in 41 years with the
services sector affected the worst by the coronavirus pandemic.
=================
I N D O N E S I A
=================
REJEKI ISMAN: Fitch Assigns BB- Rating on Proposed USD Unsec. Notes
-------------------------------------------------------------------
Fitch Ratings has assigned Indonesia-based integrated textile and
garment manufacturer PT Sri Rejeki Isman Tbk's (Sritex,
BB-/Negative) proposed US dollar senior unsecured notes a 'BB-'
rating. The notes will be issued by Sritex and guaranteed by its
subsidiaries, PT Sinar Pantja Djaja, PT Bitratex Industries and PT
Primayudha Mandirijaya. The notes are rated at the same level as
Sritex's senior unsecured rating as they represent the company's
unconditional, unsecured and unsubordinated obligations.
The proceeds of the issuance will be used to refinance part of
Sritex's syndicated facility and short-term facilities, alleviating
its short-term liquidity pressure and extending the maturity of a
portion of its debt due January 2022. Fitch estimates Sritex's
leverage, measured as net debt/EBITDA, will remain above Fitch’s
threshold of 3.0x for negative rating action until 2021, before
declining to around 3.0x in 2022. The company's ability to maintain
stable working capital will drive its deleveraging capacity,
although this comes with risks, which are captured in Fitch’s
Negative Outlook. Fitch believes Sritex's revenue will remain flat
and its EBITDA margin will be stable in 2021-2022, but a longer
working-capital cycle will depress cash flow from operations and
slow the deleveraging pace.
The Negative Outlook also reflects the risk that the weak funding
environment will persist due to prolonged negative sentiments,
especially towards the textile sector, hampering Sritex's
refinancing efforts.
KEY RATING DRIVERS
Deleveraging Risk: The Negative Outlook captures the risk of a
slower decline in leverage than Fitch expects. Fitch estimates
Sritex's net debt/EBITDA will remain at 3.2x-3.4x until 2021, above
Fitch’s negative sensitivity of 3.0x, and only improve to 3.0x in
2022. Total net debt rose to around USD840 million in 3Q20 (2019:
USD716 million) due to higher working-capital loans, as the company
invested in inventory in anticipation of improving 4Q20 sales. This
resulted in net debt/last-12-month EBITDA of 3.7x.
Working-Capital Management: Sritex's deleveraging capacity will
depend on its ability to manage its working-capital cycle. Fitch
estimates cash from operations will turn positive at around USD100
million in 2021 and 2022 under Fitch’s assumption of stable
working-capital days of around 260-270 and flat revenue after a
negative USD49 million in 9M20 on the back of inventory
investment.
Sritex's working-capital days lengthened in 9M20 to 272 (2019: 226
days) due to the impact of the coronavirus pandemic. Sritex
extended payment terms for some customers amid the pandemic and
invested in inventory due to raw-material scarcity and in
anticipation of a sales recovery. Inventory days, including
advances for inventory purchases, rose above 180 (2019: around 160
days) and receivable days to around 100 (2019: 82 days).
Healthy Revenue, Profitability Despite Covid-19: Fitch expects
stable revenue growth and profitability in the medium term, despite
the impact of the pandemic in 2020. This is supported by Sritex's
position as one of Indonesia's leading textile and garment
manufacturers and established relationships with export buyers.
Revenue will stay at around USD1.2 billion in 2021 and 2022 in the
absence of capacity expansion. Fitch forecasts the EBITDA margin
will remain stable at 18%-19% until 2022 (2019: 20%).
Deferred Capex: Fitch expects limited annual capex of around USD55
million-65 million until 2022 for maintenance after the company
deferred its capacity expansion plan due to the pandemic. This will
ease free cash flow and leverage pressure, but risks to Fitch’s
forecast will arise if Sritex pursues major debt-funded capacity
expansion over the period.
DERIVATION SUMMARY
Sritex's rating is comparable with that of PT Japfa Comfeed
Indonesia Tbk (BB-/A+(idn)/Negative) on the international and
national rating scales. Both companies are exposed to raw-material
price volatility, but have the ability to pass through cost
fluctuations to customers. Japfa's margin of less than 12% is
weaker and more volatile than Sritex's above 17%. However, this is
counterbalanced by Japfa's lower working-capital requirements,
which result in higher cash flow from operations. Fitch’s
Negative Outlook for both companies reflects the risks that
deleveraging may be slower than Fitch expects.
Sritex's rating is higher than that of 361 Degrees International
Limited (B/Negative), which faces mounting liquidity pressure due
to a lack of progress in transferring onshore cash offshore ahead
of the maturity of its US dollar bond in June 2021. In comparison,
Sritex's upcoming large maturity is only due in January 2022. Both
companies faced longer working-capital days that resulted in
working-capital outflows in 2020 due to longer receivable days
during the pandemic.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Fitch's Rating Case for the Issuer
-- Revenue growth of around 1.5% in 2021 and 2022
-- EBITDA margin of 18%-19% in 2021 and 2022
-- Stable working-capital days of 260-270 in 2021 and 2022
-- Annual capex of around USD55 million-65 million through to
2022, mostly for maintenance purposes
RATING SENSITIVITIES
Factor that could, individually or collectively, lead to positive
rating action/upgrade:
-- Fitch may revise the Outlook to Stable should net debt/EBITDA
decline to below 3.0x by 2022.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Delay in deleveraging such that net debt/EBITDA is not below
3.0x by 2022
-- Lack of refinancing progress with regards to addressing a
syndicated loan maturity by 1Q21
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Non-Financial Corporate
issuers have a best-case rating upgrade scenario (defined as the
99th percentile of rating transitions, measured in a positive
direction) of three notches over a three-year rating horizon; and a
worst-case rating downgrade scenario (defined as the 99th
percentile of rating transitions, measured in a negative direction)
of four notches over three years. The complete span of best- and
worst-case scenario credit ratings for all rating categories ranges
from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are
based on historical performance.
LIQUIDITY AND DEBT STRUCTURE
Sufficient Liquidity, Concentrated Maturities: Sritex had around
USD158 million in cash and USD170 million in unutilised committed
facilities at end-September 2020, against USD80 million in maturing
long-term debt and USD173 million in short-term bank loans that can
be rolled over. Sritex's debt maturity is concentrated, with USD350
million in bonds maturing in 2022, USD150 million in bonds maturing
in 2024 and USD225 million in bonds maturing in 2025.
ESG CONSIDERATIONS
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3'. This means ESG issues are
credit-neutral or have only a minimal credit impact on the entity,
either due to their nature or the way in which they are being
managed by the entity.
REJEKI ISMAN: Moody's Gives B1 Rating on Proposed Sr. Unsec. Notes
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Moody's Investors Service has assigned a B1 rating to the proposed
senior unsecured notes to be issued by Sri Rejeki Isman Tbk (P.T.)
(Sritex, B1 negative) and unconditionally and irrevocably
guaranteed by all its operating subsidiaries. The proposed notes
will rank equal to Sritex's existing senior unsecured notes.
The rating outlook is negative.
Sritex will use the net bond proceeds to refinance the $150 million
revolver tranche of its $350 million syndicated loan facility
maturing January 2022. The remainder will be used to term out
short-term working capital debt. The transaction is expected to be
leverage neutral.
RATINGS RATIONALE
"The proposed bond issuance will improve Sritex's liquidity by
lengthening its debt maturity profile and freeing up availability
under its revolver tranche and working capital lines, which can
then be used to support working capital and other operational
requirements," says Stephanie Cheong, a Moody's Analyst.
As of September 30, 2020, Sritex had $159 million of cash and $87
million of availability under committed bank lines, against around
$611 million of debt coming due over the next 12-18 months, namely
(1) $174 million outstanding under short-term working capital
lines; (2) $65 million of medium-term notes, of which $40 million
has been paid in Q4 2020; (3) a $350 million syndicated loan
facility maturing in January 2022; and (4) around $22 million of
debt amortization payments.
The company had on November 2 sought lenders' consent to extend the
maturity of its $350 million syndicated loan facility by two years
to January 2024. Sritex's lenders have until February 2, 2021 to
respond if they are willing to extend. There is no minimum
acceptance amount and lenders unwilling to extend will need to be
repaid by the original January 2022 maturity date.
Sritex's B1 rating reflects its vertically integrated operations
and leading market position among Indonesian textile manufacturers.
The rating also considers the company's reliance on short-term
funding to support meaningful working capital needs amid continued
challenges in its key end-markets. The rating also incorporates
governance risk arising from the company's concentrated ownership
structure and related party transactions.
The negative outlook reflects the increasing refinancing risks
associated with Sritex's $350 million syndicated loan maturing
January 2022 amid difficult market conditions.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
Given the negative outlook, an upgrade is unlikely over the next
12-18 months. Nevertheless, the outlook could return to stable if
Sritex materially improves its liquidity and debt structure over
the next 12 months.
Financial metrics Moody's would consider for a change in the
outlook to stable include (cash and long-term committed
lines)/short-term debt above 1.5x over the next 12-18 months,
debt-to-EBITDA below 5.0x and EBITA/interest expense above 2.25x.
Moody's could downgrade the ratings if Sritex fails to adequately
address its upcoming debt maturities by Q1 2021, or if Sritex's
liquidity deteriorates further, either because of falling cash
balances, a loss in access to working capital lines, or if working
capital fails to unwind over the next few quarters.
Financial metrics indicative of a downgrade include its cash
conversion cycle remaining above 240 days; debt-to-EBITDA above
5.0x; or EBITA/interest below 2.25x over a sustained period.
The principal methodology used in this rating was Manufacturing
Methodology published in March 2020.
Sri Rejeki Isman Tbk (P.T.) (Sritex), based in Central Java,
Indonesia, is a vertically integrated manufacturer of yarn, greige
(raw fabric), finished fabric and apparel, including uniforms and
retail clothing. The company's operations are spread across 25
factories, consisting of nine spinning plants, three weaving
plants, five finishing plants and eight garment plants. Net revenue
generated by the company's four divisions amounted to around $1.2
billion in 2019.
Sritex is majority owned by the Lukminto family (60.11%). Iwan
Setiawan Lukminto, the son of founder H.M Lukminto, has been the
company's president director since 2006. The family oversees the
day-to-day operations. The remaining 39.89% share of the company is
publicly traded on the Indonesian Stock Exchange.
===============
M A L A Y S I A
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HATTEN LAND: Court OKs Unit's Scheme of Arrangement with Creditors
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Hafiz Yatim at theedgemarkets.com reports that the High Court in
Melaka has approved the scheme of arrangement between MDSA Ventures
Sdn Bhd - a subsidiary of Singapore-listed Hatten Land Ltd, and its
creditors.
theedgemarkets.com relates that Judicial Commissioner Maidzura
Mohammed granted a sanction order to the company, after being told
that the scheme was approved by 96% of the total value of the
creditors present and voting in person or by proxy at a creditors'
meeting on Dec. 18.
"The court grants the sanction order to approve the proposed scheme
of arrangement and the debt restructuring of MDSA Ventures," the
court ruled Jan. 6, theedgemarkets.com relays.
Counsel Lee Shih of Lim Chee Wee Partnership appeared for MDSA
Ventures.
According to the report, Hatten Land, in an announcement to the
Singapore Exchange, said the scheme is now binding on MDSA Ventures
and the creditors.
"The Court Order dated Jan 6, 2021, approving the scheme, will be
effective once the court order is lodged with the Companies
Commission of Malaysia.
"The board further wishes to update that the High Court had granted
an extension of the restraining order for a further one month from
today," the real estate developer said.
On July 12 last year, MDSA Ventures Sdn had obtained a three-month
restraining order for it to engage in the restructuring exercise,
the report recalls.
"During the moratorium period, MDSA Ventures shall work with its
legal counsel to formulate the details of the scheme to be
presented to the creditors for their consideration,"
theedgemarkets.com quotes Hatten Land's executive chairman and
managing director Datuk Colin Tan June Teng as saying in a
statement to the Singapore Exchange then.
A restraining order is basically a court-ordered moratorium
protection. It allows the company to have protection from legal
proceedings, while the company is pursuing restructuring under a
scheme of arrangement, the report states.
The Edge Singapore reported on July 2 that Hatten Land has unveiled
various initiatives to strengthen the resiliency of its business,
following the impact of the Covid-19 pandemic.
This also entailed the strategic restructuring for MDSA Ventures
and another subsidiary, MDSA Resources, in a bid to strengthen
their balance sheet.
theedgemarkets.com says Hatten Land's operations in Singapore and
Malaysia were heavily affected during the lockdown measures in both
countries.
In Melaka, where the group's portfolio is primarily based, a
significant decline in international and domestic tourist arrivals
has affected consumer expenditure, as well as big ticket items such
as local properties, the report adds.
Hatten Land Limited operates as a property developer. The Company
develops malls, hotels, and residential properties. Hatten Land
serves customers in Singapore and Malaysia.
=====================
S O U T H K O R E A
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SSANGYONG MOTOR: KDB to Inject Funds if Mahindra Hold Its Stake
---------------------------------------------------------------
Business Korea reports that Korea Development Bank (KDB) and
Mahindra & Mahindra of India are at loggerheads over financial
support for SsangYong Motor, which applied for a corporate
rehabilitation process at the end of 2020.
Business Korea relates that the court has allowed SsangYong Motor
to undertake autonomous restructuring support (ARS) efforts until
Feb. 28 before putting it on a corporate rehabilitation program.
During this period, SsangYong will discuss measures for survival
with three other parties - KDB, Mahindra & Mahindra, and HAAH, a
U.S. automobile company that is interested in taking over
Mahindra's stake in SsangYong, the report says.
Business Korea notes that the four-party consultative body was
formed on April 30 under KDB's initiative to attract new investment
in SsangYong Motor.
Business Korea says domestic creditors including KDB put forward
two conditions for the injection of additional funds into the
ailing automaker. The creditors said that SsangYong's majority
shareholder should keep its stake to receive additional funding
from them. Yet this condition goes against Mahindra's goal of
withdrawing from SsangYong Motor after disposing of its stake. The
domestic creditors demand that even if new funds are injected into
SsangYong Motor, Mahindra maintain its position as the largest
shareholder until the repayment of the new funds
The other condition concerns the maturity of SsangYong's current
loans, the report relates. The domestic creditors said that the
maturity of the existing loans should be extended after the
maturity of the new loans. This means Mahindra should extend the
period of its guarantees for loans that SsangYong received from
foreign banks, Business Korea states. Mahindra provided verbal
guarantees for SsangYong's loans from foreign banks such as JP
Morgan and BNP Paribas.
About Ssangyong Motor
Headquartered in Kyeonggi-Do, South Korea, Ssangyong Motor Co. Ltd.
engages in the manufacture and sale of automobiles. The Company
mainly manufactures and sells recreational vehicles (RVs), sports
utility vehicles (SUVs), multi-purpose vehicles (CDVs) and
passenger cars under the brand name of rexton sports, korando,
korando sports, korando turismo, tivoli, tivoli air and others. The
Company also provides automobile parts. The Company distributes its
products within domestic market and to overseas markets.
SsangYong Motor Co. on Dec. 21, 2020, filed for court receivership
as it struggles with snowballing debts amid the COVID-19 pandemic,
according to Yonhap News Agency. The decision comes after SsangYong
Motor, the South Korean unit of Indian carmaker Mahindra & Mahindra
Ltd., failed to pay KRW60 billion (US$54.8 million) worth of debts
to its three creditor banks.
The state-run Korea Development Bank, the main creditor of
SsangYong, reportedly was scheduled to decide on whether to roll
over KRW90 billion in loans due Dec. 21, Yonhap said.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter-Asia Pacific is a daily newsletter co-
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Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez,
Julie Anne L. Toledo, Ivy B. Magdadaro and Peter A. Chapman,
Editors.
Copyright 2021. All rights reserved. ISSN: 1520-9482.
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